What's Wrong With Kimberly-Clark Stock?
Key Points
Kimberly-Clark's sales have dropped this year.
Amid the challenges, management completed the large Kenvue acquisition.
It's fair to wonder what's going on with Kimberly-Clark (NASDAQ: KMB). Its shares have dropped 16.5% over the last five years through Nov. 5. That's badly lagged the S&P 500 index's 56.5% gain.
Clearly, the company has had issues. What are they, and has Kimberly-Clark moved past them?
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Kimberly-Clark, maker of items like tissues and diapers, has seen sales drop for the last couple of years. Looking beyond the headline figures tells a better, though not great, story.
In 2025, the company's top line fell 2.9%, due to the sale of businesses that no longer generated sales and unfavorable foreign-currency translation.
On a comparable basis, excluding sold businesses and foreign-currency translations, Kimberly-Clark's sales grew 1.7%. That was due to higher volume, which contributed 2.5 percentage points. Still, that's tepid sales growth. And competitive pressures forced the company to lower prices on certain items.
Sales trends worsened this year, however. Kimberly-Clark's third-quarter adjusted sales dropped 1.3% compared to a year ago. The company's adjusted gross margin got squeezed, contracting 1.3 percentage points.
Amid sluggish sales, Kimberly-Clark recently completed the large acquisition of Kenvue. While the deal will expand the company's product portfolio with brands including Tylenol, Listerine, and Band-Aid, the transaction has large risks. These include the time, money, and risk of integrating a large business.
With Kimberly-Clark already facing pressure on its own sales, management took on major challenges by buying Kenvue. That's why, despite Kimberly-Clark having a stable of known brands, I'd pass on the shares right now.
Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.