Monday, January 26, 2009

Kimberly Clark Remains a Defensive Buy

Kimberly Clark reported that its 4th Quarter Profit fell 8%. The company had a profit of $419 million, which equated to $1.01 earnings per share for the quarter (down from $1.07 in the previous year). The company also lowered guidance for 2009 to the $4-$4.20 per share range. The consensus previously had been $4.55. Deutsche Bank lowered their price target to a Hold at $60.

Kimberly Clark is a defensive consumer staple company in my mind. The company operates with such brands as Kleenex, Huggies, Scott, Pullups, Cottonelle and Kotex. Products from the company can be found in 150 countries.

The company yields 4.5% at the time of writing. Dividends have increased recently.
2003 $1.36
2004 $1.60
2005 $1.80
2006 $1.96
2007 $2.12
2008 $2.32
A dividend increase is likely in 2009 and would put it at the $2.48 to $2.52 range, which would represent a 5% yield.
Shares trade at $51.66 as I write this, just above the 52 week low of $49.88. This low is alos a five year low.
Shares will drop because of the earnings miss and lowered forecast. Look to buy at any level below $50. Shares should be trading around $60, or fifteen times forward earnings.

2 comments:

  1. Somewhat hard to take seriously a blog without a spell checker.

    'The articles will entertain and educte.'

    ReplyDelete
  2. Nice work done… thanks a lot…

    ReplyDelete