The most difficult aspect of KMB’s financial structure turn to account for as a value investor is the large value of shares held in treasury. The concept of treasury shares is covered at Investopdia here. In KMB’s case, the value of treasury shares has been deducted from the net asset value of the company in the balance sheet. This practice reduces the net asset value of the company and can make KMB look expensive. If KMB were to cancel the shares the debit on the balance sheet would reduce. If KMB were to resell the shares KMB would receive cash at the market price for the shares. The analysis report adjusts the net asset value of KMB, to give a reasonable vies of the true value of the assets of KMB.
The price of the common stock of KMB has declined over the last few months, but the is within the context of a much longer uptrend, as you can see in the chart below.
The question now for value investors is whether the current price represents good price to start a position in KMB for new investors or to add to an existing position. The full answer can be found in the new analysis of Kimberly-Clark common stock, which you can find here.
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