From Nasdaq: 2024-11-15 08:45:00

Kimberly-Clark Corporation (KMB) is trading at a high forward P/S ratio of 2.19, raising concerns about the company’s ability to meet growth expectations. Shares have fallen 7.6% in the past three months, underperforming the industry and sector. Despite challenges, KMB’s Powering Care strategy aims to drive growth and appeal to investors.

Kimberly-Clark faces challenges in a tough consumer and retail environment, with declining demand in key markets like Asia and Latin America. Third-quarter revenues dropped 4% year over year due to inventory issues and weak demand. The company now expects lower organic sales growth for 2024, with currency headwinds adding pressure.

KMB anticipates a challenging fourth quarter with minimal profit growth. The company’s Powering Care Strategy focuses on innovation, margin optimization, and growth restructuring. By introducing new products, prioritizing premium items, and enhancing productivity, Kimberly-Clark aims to drive growth and improve margins in the long run.

Investors should be cautious of KMB’s high valuation and recent underperformance. Rising advertising costs and market challenges pose risks. However, with a strong brand image and growth strategy in place, Kimberly-Clark offers potential for long-term success. Current investors should hold, while new investors may look for a better entry point.

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Read more at Nasdaq: How Should You Play Kimberly-Clark Stock at a P/S Multiple of 2.2X?