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On paper, Kimberly-Clark (NYSE:KMB) sounds like a great investment. The company primarily manufactures consumer tissue and dominates many of its markets. Huggies, Kotex, and Cottonelle are all household names. Its Kleenex tissues are a category killer, meaning that they have been so embraced by consumers that nose-blowers will often simply ask for a 'Kleenex.'

Additionally, it sells non-durable goods-- meaning that consumers need to buy them regularly, in good or bad times-- so the company should fare well in a recession. Having been featured in Jim Collin's book 'Good to Great'-- where it was profiled as one of the eleven greatest stocks of the 70s, 80s, and 90s by total returns-- the company has a lot to live up to.

Well frankly, it's time we recognize that the company has missed expectations. Shown below are the company's revenues and diluted earnings per share over the past five years according to the 2011 annual report:

2011

2010

2009

2008

2007

Sales

$20.8B

$19.7B

$19.1B

$19.4B

$18.3B

Diluted EPS

3.99

4.45

4.52

4.03

4.08

The relatively unimpressive revenue growth is alarming, and the fact that per share earnings are actually falling should be cause for concern. With potential cost pressures on the horizon from increasing commodity prices, the earnings environment over the next five years could be much tougher than the environment of the previous five years. The company's falling net profit margin might easily continue to slide. Currently selling at 16x earnings, the company isn't cheap. For that price, there are many other names to look at that have growth far exceeding that of Kimberly-Clark.

The company simply lacks that 'it' factor. When you put solid financials, consumer loyalty, and favorable economics in play, a company should do well, but it is certainly no guarantee. Whatever the reason, whether it be apathetic management or just poor luck, the numbers don't lie. The stock is not performing. Unless some major change occurs, on the order of a new CEO or a new strategic direction, the enterprising investor should look elsewhere for satisfactory investment returns.

There is a silver lining here that is worth mentioning. With a dividend of 4% and a strong stock buy-back program, the company is performing like a stable utility. For investors seeking stable income and security of principle above all else, the company is an attractive option. As mentioned above, it should fare well in a recession, and its brand loyalty goes a long way toward making it a durable investment.

If you're feeling like an aggressive total return seeking investor, then this stock isn't for you. But if thinking about market risk makes you feel a little ill, then you may want to consider reaching for a Kleenex.

Source: Is It Time To Ditch Kimberly-Clark?