Kimberly-Clark (NASDAQ:KMB) is a consumer staples company that manufactures prominent household brands for tissues, toilet paper, diapers, and feminine hygiene products.
With the stock having hit a 52-week low recently and with the consumer staples and utilities sector being trashed in preference for technology, we looked at whether this was a chance to get in on a bargain opportunity.
KMB data by YCharts
The cool stuff
While pretty much no one calls a consumer staples company "cool," we thought we would list the stuff we do like about this one under that heading. KMB products are a household name and, in many cases, supersede the actual product or are synonymous with it. For example "Do you have a Kleenex?" is far more likely the question you would hear versus "Do you have a tissue?". The other thing that stands out for KMB is the commitment to return cash to shareholders.
KMB Dividend data by YCharts
Those gradual step ladder dividend climbs have made many, many shareholders reach for a Kleenex to wipe away tears of joy as they read their monthly brokerage statements (increasing demand for a key product for KMB and creating a vicious cycle).
So do we take the plunge
KMB's dividend yield is now higher than at most points over the last 3 decades.
KMB Dividend Yield (TTM) data by YCharts
With an adjusted EPS of $7 expected this year, the payout ratio will still be a rather low sub 60% and the stock is now trading at about 14X expected earnings. So why has the stock taken such a beating?
There are three core issues for KMB that currently weigh on the stock:
1) Consumer staples is fiercely competitive with store brands and other brand name companies intensely competing for the same dollars.
2) The low interest
