KMB

Kimberly-Clark is a high-quality consumer-staples franchise — Kleenex, Huggies, Scott, Kotex and Depend sold in 175+ countries — but the standalone numbers are going the wrong way. FY2025 revenue fell 2.1% to $16.4B (down from $20.2B in 2022, partly reflecting the IFP business now in discontinued operations), and the income statement deteriorated across the board: gross profit -5.8%, operating income -12.9%, net income -20.6% to $2.02B, and diluted EPS -19.6% to $6.07. Gross margin of 36.0% and operating margin of 14.3% are respectable for the category, but the trend is compression, not expansion. The 10-K's own risk language flags why: cellulose/fluff pulp and petroleum-derived inputs 'experience significant volatility,' and there is 'no assurance' that price increases will fully offset cost inflation — exactly the squeeze visible in the margin line.

The balance sheet is thin and offers little cushion. Stockholders' equity is just $1.50B (the eye-popping 134.6% ROE is an artifact of that tiny denominator, not superior returns), cash fell 31.9% to $688M, and current liabilities ($7.13B) exceed current assets ($5.31B) for a current ratio of ~0.74 — structurally negative working capital. Operating cash flow dropped 14.1% to $2.78B while capex jumped 57.8% to $1.14B, leaving ~$1.64B of free cash flow that barely covers the $1.66B dividend. Buybacks were cut 85.9% to $141M, a tell that capital is being conserved. (Note the long-term-debt figure is tagged FY2016 in the data, so current leverage is not cleanly observable here.)