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Last update on 2024-06-07

Kimberly-Clark (KMB) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Comprehensive Piotroski F-Score Analysis of Kimberly-Clark (KMB) for 2023, illustrating financial strength with a score of 6/9 across profitability, liquidity, and operating metrics.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 6

We're running Kimberly-Clark (KMB) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score assesses a company's financial health based on 9 metrics related to profitability, liquidity, and efficiency. Kimberly-Clark (KMB) scores 6 out of 9. It shows strong performance with consistent positive net income and cash flows, healthier current ratios, increasing gross margins, and better asset utilization. However, they're losing points on declining ROA, increasing leverage, and slight share dilution. Historically, the company has been stable and profitable, but there's still room for improvement in some areas to match industry medians.

Insights for Value Investors Seeking Stable Income

Given its consistent profitability and strong cash flows, Kimberly-Clark (KMB) appears to be a stable and potentially undervalued investment. The areas of improvement like ROA and leverage should be monitored, but the strong fundamentals make it worth considering for further analysis and inclusion in a diversified investment portfolio.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Kimberly-Clark (KMB)

Company has a positive net income?

Net income represents the total profit of a company after all expenses and taxes are deducted. It’s a key measure of profitability.

Historical Net Income of Kimberly-Clark (KMB)

The net income for Kimberly-Clark (KMB) in 2023 is $1.764 billion, marking a positive figure. Over the past 20 years, the company has consistently reported positive net income, with figures ranging between $1.013 billion in 2015 to $2.352 billion in 2020. This consistent profitability is emblematic of the company's robust financial health and effective cost management. Therefore, for the Piotroski analysis, Kimberly-Clark earns 1 point for its positive net income in 2023.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash a company generates from its regular business operations. It's important because positive CFO suggests that the company is generating sufficient cash to maintain and grow its operations.

Historical Operating Cash Flow of Kimberly-Clark (KMB)

For Kimberly-Clark (KMB), the Cash Flow from Operations (CFO) in 2023 stands at $3,542,000,000, which is a positive figure. This positive CFO is a favorable trend, adding 1 point to the Piotroski Score. Analyzing the past 20 years, Kimberly-Clark’s CFO has consistently been positive, demonstrating a strong ability to generate cash from its core operations. This consistency underscores the company's effective business model and operational efficiency. With numbers exceeding $3 billion in multiple years and a peak at over $3.7 billion in 2020, the performance has been robust, indicating Kimberly-Clark’s stability and potential for sustainable growth.

Return on Assets (ROA) are growing?

Change in ROA (Return on Assets) measures a company's profitability relative to its total assets. It is important since it provides insight into how efficiently a company is using its assets to generate earnings.

Historical change in Return on Assets (ROA) of Kimberly-Clark (KMB)

For Kimberly-Clark (KMB), the ROA decreased from 0.108 in 2022 to 0.0999 in 2023. This results in no points for this criterion, as the decrease indicates that the company's efficiency in generating profits from its assets has worsened year over year. Comparing the trend over the last 20 years, the ROA has seen fluctuations but overall has not managed to surpass industry median levels, which stood at 0.4411 in 2023. This shows that while KMB's ROA is substantially lower than the industry median, there is ample room for improvement to reach closer to industry standards.

Operating Cashflow are higher than Netincome?

This criterion evaluates whether the company's operating cash flow (OCF) surpasses its net income. It's important as higher OCF indicates superior earnings quality and financial stability.

Historical accruals of Kimberly-Clark (KMB)

In 2023, Kimberly-Clark's operating cash flow was $3.542 billion, significantly higher than its net income of $1.764 billion. This results in a net positive accrual of $1.778 billion. A positive accrual is often taken as an indication of earnings quality and reliability, suggesting that the company's income is backed by actual cash flows. In fact, Kimberly-Clark, through its 20-year history, demonstrates cycles of strong operating cash flows often surpassing net income, highlighting the firm's persistent ability to generate cash. Specifically, 2023's high OCF versus Net Income emphasizes Kimberly-Clark's effective core operations and strong liquidity position. This upward trend is a beneficial sign, aligning with the conservative investing principle of placing value on companies with stable, actual cash earnings. Hence, we add 1 point for this criterion in the Piotroski score for Kimberly-Clark in 2023.

Liquidity of Kimberly-Clark (KMB)

Leverage is declining?

The criterion assesses whether a company has reduced its financial leverage compared to the previous year. A decrease signifies a more stable financial structure, while an increase could indicate rising debt levels.

Historical leverage of Kimberly-Clark (KMB)

In 2022, Kimberly-Clark (KMB) had a leverage ratio of 0.4217, which increased to 0.4276 in 2023. Given this increase, we would set the score for this criterion to 0. The upward trend, even if marginal, implies that the company has increased its debt relative to its equity. Over the past two decades, Kimberly-Clark's leverage has shown significant fluctuations, peaking at 0.4564 in 2021 and hitting a low of 0.004 in both 2017 and 2018. This rise in leverage might raise concerns about the company's reliance on debt to fuel its growth or operations, especially when considering the broader trends over the last 20 years where leverage was consistently below 0.2885 until 2013.

Current Ratio is growing?

The criterion examines the change in the current ratio, which measures a company's ability to cover its short-term liabilities with its short-term assets.

Historical Current Ratio of Kimberly-Clark (KMB)

Kimberly-Clark's current ratio has increased slightly from 0.7812 in 2022 to 0.8229 in 2023. This adjustment, however marginal, is positive as it indicates an enhanced ability to cover short-term liabilities. Historically, KMB’s current ratio has shown fluctuations, peaking in the mid-2000s with values exceeding 1.1 and declining in the 2010s with a marked decrease during 2018-2020, aligning more closely with industry medians. The company's current figure, although falling short of the 1.5 median of its industry peers in 2023, reflects a modest enhancement, awarding KMB 1 point under this criterion.

Number of shares not diluted?

The change in shares outstanding assesses whether a company is issuing more shares or buying back shares. A decrease is favorable as it indicates the company is repurchasing its shares, boosting shareholder value.

Historical outstanding shares of Kimberly-Clark (KMB)

Kimberly-Clark's outstanding shares increased slightly from 337,400,000 in 2022 to 337,800,000 in 2023. According to the Piotroski analyses, an increase in outstanding shares is seen as a negative indicator since it usually suggests that the company might be diluting shareholder value. Looking at the additional data, Kimberly-Clark has made significant reductions in its shares outstanding over the last 20 years, dropping from around 508.7 million in 2003 to 337.8 million in 2023. Although this long-term trend is positive, the slight uptick in shares outstanding in the most recent year means Kimberly-Clark scores a 0 on this criterion.

Operating of Kimberly-Clark (KMB)

Cross Margin is growing?

The change in Gross Margin measures the efficiency improvements in a company's core operations. An increase is a positive sign, indicating better cost management or higher pricing power, while a decline could signal operational issues.

Historical gross margin of Kimberly-Clark (KMB)

Kimberly-Clark's Gross Margin increased from 0.3083 in 2022 to 0.3442 in 2023, marking a positive shift. This earns the company 1 point for this Piotroski criterion. The historical data shows variability in Gross Margin, reaching a low of 0.2951 and a high of 0.3654 over the last 20 years, but generally hovering around an industry median that's notably higher. This recent uptick implies better operational efficiency for Kimberly-Clark amidst a competitive industry landscape where the median Gross Margin in 2023 was 0.4411.

Asset Turnover Ratio is growing?

Change in Asset Turnover evaluates the efficiency a company uses its assets to generate sales revenue. It’s essential as better usage reflects improved company operations and higher productivity.

Historical asset turnover ratio of Kimberly-Clark (KMB)

Comparing the Asset Turnover ratio of 1.1571 in 2023 to 1.1269 in 2022, it is clear that Asset Turnover has increased. This rise implies Kimberly-Clark (KMB) has enhanced its efficiency in generating revenue from its assets, suggesting better asset utilization. Historically, KMB’s trend over the last 20 years reflects gradual improvement in this measure, indicating an ongoing focus in efficient operations. Consequently, the increase in 2023 earns KMB a point in this criterion.


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