Kimberly-Clark CorporationKMBNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $297.35 per share(market-calibrated)

+171.0%

Upside to Fair Value

Current

$109.74

Pure Model

$326.31

Fair Value

$297.35

Bull Case

$426.37

Bear Case

$251.38

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $326.31.

What's Driving This Ratingfor KMB

↓

CapEx normalizing toward maintenance

Historical CapEx is 5.24% of revenue (heavy investment phase). Model fades this to 3.00% by Year 10, freeing up ~$863M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 13.50% — below the sector mature average of 16.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $5.9B (15.18% margin).

→

Moderate revenue growth

Analyst consensus projects 1.26% revenue growth, fading to 2.50% by Year 10. Revenue reaches $38.6B (vs $17.2B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 65.30% indicates efficient cash generation. FCF reaches $5.0B by Year 10 (12.84% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.28

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)5.75%

Cost of Debt

Pre-tax Cost of Debt3.79%

Tax Rate23.58%

After-tax Cost of Debt2.89%

Equity Weight (E/V)83.61%

Debt Weight (D/V)16.39%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (83.61% × 5.75%) + (16.39% × 2.89%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$17.4B	$18.3B	$27.2B	$33.4B	$38.6B
EBIT	$2.4B	$2.5B	$3.7B	$4.8B	$5.9B
Tax	$555M	$583M	$865M	$1.1B	$1.4B
NOPAT	$1.8B	$1.9B	$2.8B	$3.7B	$4.5B
+ Depreciation	$782M	$821M	$1.2B	$1.5B	$1.7B
- Capex	$913M	$868M	$1.2B	$1.3B	$1.2B
- Δ NWC	$22M	$110M	$345M	$297M	$94M
Free Cash Flow	$1.6B	$1.7B	$2.5B	$3.6B	$5.0B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$1.6B	$1.5B	$1.9B	$2.5B	$2.9B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$5.0B

Terminal Growth Rate2.50%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$169.3B

PV of Terminal Value$99.1B

Exit Multiple Method

Year 10 EBITDA$7.6B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$151.7B

PV of Terminal Value$88.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$21.2B

PV of Terminal Value$99.1B

Enterprise Value$120.3B

(-) Net Debt$6.5B

Equity Value$113.8B

Shares Outstanding333M

Price per Share$341.72

Exit Multiple Method

PV of Projected FCFs$21.2B

PV of Terminal Value$88.8B

Enterprise Value$110.0B

(-) Net Debt$6.5B

Equity Value$103.6B

Shares Outstanding333M

Price per Share$310.91

Pure Model Fair Value

$326.31

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
3.50%	$481.40	$460.30	$440.22	$421.09	$402.87
4.50%	$356.81	$390.18	$440.22	$421.09	$402.87
5.50%	$288.04	$304.44	$326.31	$356.94	$402.87
6.50%	$242.37	$251.75	$263.47	$278.54	$298.63
7.50%	$208.83	$214.71	$221.76	$230.38	$241.16

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$251.38

129.1% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.35

Base Case

$326.31

197.4% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.28

Bull Case

$426.37

288.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.30

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth1.26%

Year 3 Revenue Growth6.38%

Year 5 Revenue Growth14.56%

Year 7 Revenue Growth9.74%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin13.50%

Terminal EBIT Margin16.00%

Tax Rate23.58%

Historical Capex / Rev5.24%

Terminal Capex / Rev3.00%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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