Critical Review: Kimberly-Clark (NASDAQ:KMB) and Edgewell Personal Care (NYSE:EPC)

Kimberly-Clark (NASDAQ:KMB) and Edgewell Personal Care (NYSE:EPC) are both consumer staples companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Institutional and Insider Ownership

76.3% of Kimberly-Clark shares are owned by institutional investors. Comparatively, 91.9% of Edgewell Personal Care shares are owned by institutional investors. 0.7% of Kimberly-Clark shares are owned by company insiders. Comparatively, 3.0% of Edgewell Personal Care shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Kimberly-Clark and Edgewell Personal Care’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kimberly-Clark	11.79%	143.92%	14.21%
Edgewell Personal Care	-4.55%	5.76%	2.35%

Earnings and Valuation

This table compares Kimberly-Clark and Edgewell Personal Care”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kimberly-Clark	$16.45 billion	2.20	$2.02 billion	$5.88	18.46
Edgewell Personal Care	$2.24 billion	0.59	$25.40 million	($2.00)	-14.30

Kimberly-Clark has higher revenue and earnings than Edgewell Personal Care. Edgewell Personal Care is trading at a lower price-to-earnings ratio than Kimberly-Clark, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings for Kimberly-Clark and Edgewell Personal Care, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kimberly-Clark	1	11	4	1	2.29
Edgewell Personal Care	1	4	3	0	2.25

Kimberly-Clark currently has a consensus target price of $117.93, indicating a potential upside of 8.62%. Edgewell Personal Care has a consensus target price of $31.83, indicating a potential upside of 11.32%. Given Edgewell Personal Care’s higher probable upside, analysts plainly believe Edgewell Personal Care is more favorable than Kimberly-Clark.

Volatility and Risk

Kimberly-Clark has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500. Comparatively, Edgewell Personal Care has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500.

Dividends

Kimberly-Clark pays an annual dividend of $5.12 per share and has a dividend yield of 4.7%. Edgewell Personal Care pays an annual dividend of $0.60 per share and has a dividend yield of 2.1%. Kimberly-Clark pays out 87.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Edgewell Personal Care pays out -30.0% of its earnings in the form of a dividend. Kimberly-Clark has increased its dividend for 54 consecutive years. Kimberly-Clark is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Kimberly-Clark beats Edgewell Personal Care on 13 of the 18 factors compared between the two stocks.

About Kimberly-Clark

Kimberly-Clark Corporation, together with its subsidiaries, manufactures and markets personal care and consumer tissue products in the United States. It operates through three segments: Personal Care, Consumer Tissue, and K-C Professional. The company’s Personal Care segment offers disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, reusable underwear, and other related products under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Sweety, Kotex, U by Kotex, Intimus, Thinx, Poise, Depend, Plenitud, Softex, and other brand names. Its Consumer Tissue segment provides facial and bathroom tissues, paper towels, napkins, and related products under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve, and other brand names. The company’s K-C Professional segment offers wipers, tissues, towels, apparel, personal protective equipment, soaps, and sanitizers under the Kleenex, Scott, WypAll, Kimtech, and KleenGuard brands. It also sells household use products directly to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores, and other retail outlets, as well as through other distributors and e-commerce; and away-from-home use products directly to distributors, manufacturing, lodging, office building, food service, and public facilities, as well as through e-commerce. Kimberly-Clark Corporation was founded in 1872 and is headquartered in Dallas, Texas.

About Edgewell Personal Care

Edgewell Personal Care Company is a manufacturer and marketer of personal care products in the wet shave, sun and skin care, feminine care and infant care categories. As of September 30, 2016, the Company had a portfolio of over 25 brands. It manages its business in four segments: Wet Shave, Sun and Skin Care, Feminine Care and All Other. Its Wet shave products are sold under the Schick, Wilkinson Sword, Edge, Skintimate, Shave Guard and Personna brand names. Its Sun and Skin Care products are sold under the Banana Boat, Hawaiian Tropic, Wet Ones and Playtex brand names and offers Wet Ones, portable hand wipes category, and Playtex household gloves, the branded household glove in the United States. Its Feminine Care segment markets its products under the Playtex, Stayfree, Carefree and o.b. brands and markets pads and liners. Its All Other segment includes infant care, pet care and miscellaneous other products.