Stock-In-Trade
Divorce, Fool Style
February 18, 1998

Sometimes when you have a really great product, nobody even remembers that you have competition. That's when phrases like "Give me a soda" make way for "Give me a Coke." And do you say you're going to LaserTone your report? Nope, you're going to Xerox your report.

So when Rick tells Ilsa that "the problems of three little people don't amount to a hill of beans in this crazy world," what it is that you reach for? Or when you remember that the last time you watched Captain Renault shoot the Nazi commander you were holding hands with your ex? Do you want a Puffs? Do you want a facial tissue? C'mon... you want a Kleenex?

Well, lover, the folks who make Kleenex are actually a public company called Kimberly-Clark <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KMB)") else Response.Write("(NYSE: KMB)") end if %>. And they do a lot more than just make facial tissue (or, as their annual report says, "tissue based products.") They also make and sell Huggies diapers, Kotex feminine care products, Depend adult undergarments, Scott paper towels.

Last year wasn't a really great year for Kimberly-Clark. Just last week it announced that earnings per share from operations in 1997 were $2.44, compared to $2.37 in 1996. Including nonoperating items, net earnings per share fell to $1.62, from $2.49 the year earlier. Chief Executive Wayne Sanders said, "The earnings performance of the company's personal care businesses was depressed by lower selling prices, particularly for tissue products worldwide; heightened competition in Europe; and transitional issues in our North American away-from-home business."

The company has also spent the last couple of months trying to turn things around. It divested itself of its noncore newpsrint and pulp operations late in 1997 and sold off its interest in Scott Paper Ltd. of Canada.

Recently Kimberly-Clark's main rivals for America's noses (Procter & Gamble, for example) were forced to raise its consumer prices. Last week Kimberly-Clark followed its lead. While that's not very good news for those Fools watching tear-jerkers, it's good news for investors of Kimberly-Clark. Salomon Smith Barney paper and forest products analyst Chip Dillon raised his rating on Kimberly-Clark from "hold" to "outperform." He's not alone. Eleven other analysts follow Kimberly-Clark, and they have a consensus rating of "outperform" on the stock, also.

Dillon said in a research note last week that "In light of Procter & Gamble Co.'s and Fort James Corp.'s decisions to raise consumer tissue prices, which we see as partially successful, we consider our $2.85 1998 EPS estimate for Kimberly-Clark as more attainable than before."

If you'd like to learn more about Kimberly-Clark check out the company's website. Then come back here and talk to other Fools about what you think about Kimberly-Clark. And while you're at it, let us know whether or not you think Rick was a fool for putting Ilsa on that plane.

-- Trudy Bowen (TMF Hoyden)