Kimberly-Clark Stock: Navigating Margin Growth and Market Challenges
Kimberly-Clark stock (NYSE: KMB) has gained 8% this year, outperforming the S&P 500 which has declined 2%. While markets broadly face pressure from new U.S. tariffs on Canada, Mexico, and China, investors are seeking defensive positions amid economic uncertainty. Our take on market crash risk right now has more details on how tariffs impact the broader markets.
Despite this recent strength, KMB stock remains up 13% when viewed over a longer timeframe from early 2023, underperforming the 50% gains for the broader S&P500 index. This can primarily be attributed to:
- a 32% rise in the company’s earnings per share from $5.72 in 2022 to $7.55 in 2024; partly offset by:
- a 15% fall in trailing P/E ratio to 18.7x now, versus 22.1x in 2022

Image by Alexa from Pixabay
Earnings Resilience Despite Modest Revenue Trends
Despite a slight decline in Kimberly-Clark’s revenue of approximately 1% since 2022, the company has demonstrated remarkable earnings growth, driven by significant improvements in profitability. Kimberly-Clark’s operating margin experienced a substantial expansion of over 300 basis points, rising from 13.3% in 2022 to 16.5% in 2024. Similarly, the net margin climbed from 9.6% to 12.7% during the same period, primarily attributed to strategic productivity savings and advantageous pricing strategies.
However, the company’s sales performance remained subdued. While benefiting from favorable product pricing, Kimberly-Clark has encountered challenges in generating robust volume growth. This nuanced combination of marginally lower sales and expanded margins culminated in a remarkable 32% increase in earnings per share, escalating from $5.72 in 2022 to $7.55 in 2024.
Valuation Challenges: Navigating Sales Slowdown and Market Dynamics
Decelerating sales growth has cast a shadow over investor sentiment. Despite the company’s improving profitability, the market has tempered its valuation in response to the revenue decline. A silver lining emerges in the form of market share gains in North America during the previous year. However, the persistent inflationary pressures and challenging consumer spending landscape present significant headwinds for Kimberly-Clark in the immediate future. This cautious outlook is vividly reflected in the company’s valuation multiple, which has contracted from 22.1x trailing earnings in 2022 to 18.7x now.
Stock Evaluation: Current Price and Future Potential
We believe Kimberly-Clark’s stock is appropriately valued at $140, representing a trailing price-to-earnings multiple of approximately 19x based on earnings of $7.55 per share. This valuation sits marginally below the company’s four-year average P/E ratio of 21x. The recent downward adjustment to the valuation multiple appears warranted, considering the underlying market challenges and performance dynamics discussed above. For investors considering KMB stock, a strategic approach would involve awaiting a potential price pullback to optimize long-term investment returns.
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