Kimberly-Clark Earnings: Sales and Margin Gains Despite Competitive Angst; Shares Attractive

We expect to maintain our $136 fair value estimate for narrow-moat Kimberly-Clark apart from a low-single-digit percentage uptick for time value after digesting fair fourth-quarter marks of 3% organic sales growth and 210 basis points of expansion in gross margin. Further, its initial fiscal 2024 guidance for low- to mid-single-digit organic sales growth and high-single-digit adjusted EPS growth generally aligns with our forecasts. However, the stock pulled back by 5.5% on Jan. 24 after the print. We believe the market’s concern centers around the potential for intensifying competition, particularly from lower-priced private-label fare, and Kimberly’s response. But we see this trepidation as overblown and view shares as attractive at a 10%-15% discount to our intrinsic valuation.