Shares of household and personal products company Kimberly-Clark Corp. (KMB, Financial) are up more than 4% following the announcement of its fourth-quarter and full-year 2020 results. The Irving, Texas-based consumer products manufacturer posted results that beat analysts' expectations before the opening bell on Monday.
The company's market value is up more than 22% since bottoming last March, but is still down more than 4% over the last 12 months. At the current price of about $137.88 per share, Kimberly-Clark's stock appears to be relatively overvalued based on the Peter Lynch earnings line of 15.
Highlights from fourth-quarter results
In the company's most recent quarterly results, Kimberly-Clark posted a slight decrease in adjusted earnings per share of 1.17% to $1.69, which outperformed the consensus Street estimate of $1.61 by 5%.
The company's quarterly revenue grew 5.52% on a year-over-year basis to $4.84 billion, again outpacing the consensus analyst estimate of $4.71 billion.
Full-year adjusted earnings per share grew 12% to $7.74 from $6.89 posted a year ago. The company's annual revenue was up 4% to $19.1 billion, aided by organic sales growth of 6%.
Kimberly-Clark now expects revenue to grow between 4% and 6% in fiscal 2021. Adjusted earnings per share are expected to range from $7.75 to $8.
The board of directors at Kimberly-Clark approved a 6.5% dividend increase, which is the 49th consecutive annual increase. The company's current payout of 61.54% has room to go higher, while its forward dividend yield of 3.24% will be attractive to dividend growth investors.
The company was among the few businesses to witness a bump in sales because of Covid-19, as highlighted by CEO Mike Hsu in the earnings statement.
"In 2020, we grew organic sales 6 percent, with healthy underlying performance and increased demand because of COVID-19. We also significantly increased brand investments and improved our market share positions," he said.
Valuation
From a valuation perspective, shares of Kimberly-Clark are trading at a forward price-earnings ratio of 17.65, which is relatively better than The Procter & Gamble Co.'s (PG, Financial) equivalent of 21.89. Another close peer, Helen of Troy Ltd. (HELE, Financial), trades at a forward price-earnings ratio of 20.26 while Church & Dwight Co. Inc.(CHD, Financial) is valued at a forward price-earnings ratio of 28.60.
Kimberly-Clark's trailing price-earnings ratio of 20.03 is also better than PG's 24.95, Helen of Troy's 27 and Church & Dwight's 28.26. This makes it an interesting pick for value investors.
In summary, shares of Kimberly-Clark appear to be overvalued based on the Peter Lynch value. However, when we compare it to close peers, the company's current market valuation looks relatively better. It could be an interesting value pick for 2021.
Disclosure: No positions in the stocks mentioned.
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