Kimberly-Clark (KMB)

Total return at 5 years: 10.4%/year = 5.3% appreciation + 5.1% dividend. The target price ($128) is ex-dividend; the $28 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $138 · Multiples $127) exceeds the market price ($99).

Today — fairly valued: at $99 trades ~22.4% below its value discounted to today (~$127); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — Infravalorado: the target price ($128) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$82.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($99) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-5.2%/year) than we project (2.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$1.4 bn of owner earnings in year 5 (vs ~$2.1 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on Utilidad neta normalizada (P/E). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Rolling grid: year 0 is the real TTM (revenue of US$16.58 billion as of Jun 30, 2026). Kimberly-Clark is a global hygiene and personal care consumer staple, with No.1 or No.2 brands in ~70 countries (Huggies, Kleenex, Scott, Kotex, Depend). It is valued on P/E over normalized net income from continuing operations (~US$1.89bn, margin ~11.4%) — ex charges from the 2024 Transformation Initiative (US$351M in FY2025) and Kenvue transaction costs (US$32M), and excluding the result of the discontinued IFP operations (transitioning into the joint venture with Suzano). Reported revenue falls ~-2%/year in FY24-25 despite positive organic growth (+1.7% in 2025, volume +2.5%) — the gap is portfolio divestitures (~-2.9 points) and FX (~-0.9 points); the start of the path (+1.8%) uses the normalized organic reading, not the reported one. Revenue compounds ~2.3%/year with the margin recovering from ~11.4% to ~12.9% as the Transformation program completes (a target of US$3,000M in gross savings) and capex, elevated by tariffs (TTM US$1.51bn versus D&A of US$0.73bn), normalizes. Exit multiple 18× (base; bear 15× / bull 21×): the mid-to-lower part of the consumer staples band [16-22×], below the center for the weaker organic momentum and the uncertainty of two simultaneous corporate transactions (IFP/Kenvue). P/E delivers equity directly; the debt (~US$7.2bn, cited from the filing) lives in the health block, not in the DCF (netCash:0). Cash does not accumulate: the real payout (dividends + buybacks over today's real FCF) is ~95%, close to a full returner — buybacks were cut sharply (from US$1,000M in FY2024 to ~US$80M TTM) to conserve cash ahead of the ~US$6.7bn in cash committed to the Kenvue merger (not incorporated into the base).

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $128 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $99, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $128 in 5 years plus $28 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $127. Against the current market price ($99), the margin of safety is 22.4% (trades below the maximum → there is margin) and the total return at that price would be 10.4% annually.

• Multiple vs. quality. Today's normalized P/E 17×, in the lower-middle part of the consumer-staple band [16-22×] — reflects the weaker organic momentum and corporate uncertainty, not a deep bargain.
• Reverse-DCF. The growth implied by today's price is moderate, consistent with a low-growth consumer staple — with no large gap between the implied figure and the base case.
• Margin of safety. The expected total return in the base case combines modest appreciation and a high dividend (~4.7%) — neither a bargain nor overvalued, a reasonable price for a defensive, low-growth compounder.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✓ ROIC exceeds the cost of capital (~10%)
• ✓ High incremental ROIC (compounding)
• ✓ CFROIC backs up the ROIC (83%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• ROIC vs. the 10% bar. Estimated return on invested capital ~28% (NOPAT over an invested-capital base reduced by decades of buybacks) — well above the 10% bar, though the estimate relies on a debt figure cited from the filing (without book equity broken out in this pass).
• Margin and stability. GAAP operating margin is volatile year to year due to restructuring charges and non-recurring gains/impairments; normalized (~16.6%) it is more stable, in line with the category.
• Cash quality. Real free cash flow (TTM ~US$1.84bn) is depressed by elevated capital expenditure (tariffs + Transformation), not by accruals — the decline is explainable and partly transitory. CFROIC (~22.8%) sits below ROIC (~27.6%): maintenance capital expenditure is anchored to actual depreciation and the rest (automation/plant consolidation under the Transformation program, tariff response) is treated as growth capital expenditure, rather than applying the Greenwald criterion to reported revenue —which falls due to portfolio divestitures (IFP → the joint venture with Suzano) and FX, while organic growth is positive—, which would understate that growth capital expenditure to zero.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

The engine of a consumer staple is volume × price. At Kimberly-Clark, consolidated organic growth (+1.7% in 2025) came from volume (+2.5%), partially offset by price (-0.9%) — evidence of limited pricing power against input-cost inflation and private-label pressure. The 10-K only breaks out YoY growth rates by segment (not absolute unit/case levels); the table shows the available revenue levels by segment. The geographic engine is even between North America and International Personal Care, with no single dominant market.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Real, not nominal. The organic figure (+1.7%) is real; the reported figure (-2.1% in FY2025) is depressed by portfolio divestitures and FX, not a decline in demand.
• Growth engine. Volume (+2.5%) sustaining the organic figure while price subtracts (-0.9%) — the opposite mix from the pure pricing power of a KO/PG.
• Deceleration and cycle. Growth is already at a low, stable level (~+2%); there is no pronounced deceleration phase ahead, but neither is there a clear acceleration engine.

• Relevant in 10 years (recurrence). Daily, recurring consumer hygiene products (diapers, tissue, feminine care); the category persists through any cycle, but competes with private label.
• Pricing power. Limited: in 2025 price subtracted -0.9 points from growth despite input-cost inflation, with volume (+2.5%) sustaining the organic figure — a sign of elasticity, not pure pricing power.
• Moat and its direction. Wide and stable from #1/#2 brand position in ~70 countries and manufacturing scale; pressured by private label and e-commerce, which lower entry barriers.
• Capital cycle. Mature defensive consumer sector; today's elevated capex responds to tariff mitigation and the Transformation program, not a competitive investment race.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✓Leverage (net debt / EBITDA)Net cash $0 bn
• –Interest coverage (EBIT / interest)no data
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 83% of ROIC
• ✓Value creation (ROIC − 10% bar)+18pp
• !Malinvestment test (capex vs incremental ROIC)Strong investment mode 2.1x
• !Float / working capitalConsumes cash $0.3 bn (positive WC)
• ✓Dilution (SBC % of revenue + shares)SBC 0.8% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Debt ~US$7.2bn as of Dec-2025 (cited from the filing); moderate for a consumer staple of this size, though maturity detail and book equity are not available in this pass.
• Coverage and cash. Real cash flow (~US$1.84bn TTM) covers the dividend (~US$1.67bn) with a tight margin; elevated capex from tariffs/Transformation is the main cash drain today.
• Merger with Kenvue. A ~US$6.7bn cash commitment pending payment at closing — a major balance-sheet event not incorporated into the standalone base case; the termination fee (~US$1,136M) is the cost of a failed closing.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Skin in the game. No verified insider-ownership data in this import (DEF 14A proxy not located with a reliable anchor) — pending a subsequent review.
• Capital allocation. Prioritizes the dividend (54 years of increases, ~54% of real cash flow deployed) and mitigation/transition capex; buybacks were sharply cut (from US$1,000M to ~US$80M TTM) to conserve cash ahead of the Kenvue merger.
• Integrity / normalization. The company discloses in detail the charges that distort GAAP (Transformation Initiative, Kenvue merger costs, intangible impairment) in its filings.

• Reported revenue has been declining (~-2%/year in FY24-25) while organic growth is positive (+1.7% in 2025) — the gap is an accounting one (portfolio divestitures and currency effects), not a real operating decline, but it hurts the market's perception of the business.
• Two simultaneous, complex corporate transactions — the IFP joint venture with Suzano and the pending merger with Kenvue — generate integration uncertainty, dilution (~46% for current K-C shareholders), and closing risk, which keeps buyers away until the outcome is resolved.
• Elevated capex (above depreciation, from investments tied to tariffs and the Transformation program) depresses reported free cash flow today — mitigation/transition capex, not a sign of business deterioration.

The combination of corporate complexity (two simultaneous transactions) and a superficial reading of reported revenue (which hides the positive organic growth) generates a missing-buyers type discount: the business is not broken, but it is hard to analyze until the transactions are resolved. The standalone base value (excluding the effect of Kenvue, which has not closed) suggests a moderate margin, not a deep bargain.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at ~0%/year (+2% total): the margin of safety protects the downside. The bull (+17%/year, +121% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Merger with Kenvue. The structural disconfirming test: dilution (~46%), integration risk, shareholder litigation already filed, and a termination fee of ~US$1,136M if it does not close before Nov-2-2026.
• Volume and private label. Growth rests on volume while price subtracts; if private label gains further ground, the organic engine weakens.
• Tariffs and inputs. ~US$100M of incremental tariff cost in 2025, expected to be comparable in 2026, plus the volatility of wood pulp and petroleum derivatives.
• Concentration in Walmart. ~16% of continuing-operations sales concentrated in a single customer — considerable bargaining power over price and shelf space.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  A wide moat and ROIC 28% above the 10% bar, but the margin is limited (+22%) → excellent business at a fair price.

• Peter Lynch Growth at a reasonable price (GARP)

  A slow grower growing 2% at a PEG of 8.7 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 8% (EBIT/EV) + ROIC 28% → brushes the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts -5% vs our 2%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -6%/yr, bull-scenario ceiling +13%/yr over 5y: reasonable asymmetry, without an ample cushion.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, stable; sources: intangibles, efficient scale, cost advantage, switching costs → passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -5%, within what we project (2%) — the story squares with the numbers.