Many consumers around the world are familiar with Kleenex facial tissue, Kotex feminine hygiene products, and Huggies diapers, and all of these famous brands belong to Kimberly-Clark (NYSE:KMB). In the past twelve months, Kimberly-Clark has performed better than fellow global consumer goods corporations Unilever (NYSE:UL) and Procter & Gamble (NYSE:PG). While Kimberly-Clark has experienced a 31.40% increase in the market since November of last year, the gains of Procter & Gamble and Unilever were only 20.14% and 6.43%, respectively. Should investors consider Kimberly-Clark a good investment opportunity now? Let's dive in and find out

Impressive growth in the international markets
The market optimism about Kimberly-Clark was mainly due to its great third quarter results. In the third quarter, Kimberly-Clark delivered organic sales growth of 5%, mainly driven by a 10% growth in K-C International. The impressive improvement in K-C International has come from emerging markets. For example, its diaper business has experienced magnificent organic growth of 45% in China, 35% in Russia and 20% in Brazil, supported by the company's product innovations.

Kimberly-Clark has had many innovations in Russia, including the launch of boy/girl diaper pants at a premium price that are doing quite well. In China, the company also launched some tier-six products, which could be classified as a super-premium category. The main challenges for K-C International have been negative currency translation effects and higher commodity costs in some markets. 

In order to improve its operating performance, Kimberly-Clark also focuses on cost saving initiatives. To do this it has the famous FORCE, or Focus on Reducing Costs Everywhere, plan. In the third quarter, with the help of $70 million in FORCE cost savings, its operating margin reached 15.6%, which was 10 basis points higher than last year. The company mentioned that since the plan was implemented several years ago, Kimberly-Clark has reached around $150 million a year in savings. The company expects to generate a healthy amount of FORCE savings going forward. 

Unilever's cost efficiencies
Unilever's operating performance also improved thanks to its Maxing the Mix strategy, which includes creating new products and staying away from the businesses that only bring volume but not returns. Moreover, the company is also applying low-cost business models in the laundry and ice cream categories. It is also focusing on cost efficiencies in the total business value chain, ranging from material sourcing to sales. Those initiatives have helped Unilever increase its gross margin by 120 basis points, while the core operating margin rose by 40 basis points to 14%. 

Procter & Gamble's huge savings program
The leading position in the global diaper market belongs to Procter & Gamble with its Pampers brand. This brand is considered the largest of the company, and also the No. 1 diaper brand in the world. Procter & Gamble also relies on a cost savings program to drive its future profitability. The company is implementing its $10 billion cost reduction plan, including $2 billion in operating leverage, $6 billion in cost of goods sold, and another $2 billion in overhead savings and market efficiencies. A part of the savings program will comprise support staff reductions in emerging markets and factory shutdowns in developed markets. 

A short comparison
Let's take a quick look at the companies' valuations and dividend yields to determine their relative attractiveness.


Dividend yield

Forward P/E










Income investors should love Unilever because it has the highest dividend yield at 3.70%. However, it also has the highest forward earnings valuation at 18.5. With similar valuations, Kimberly-Clark and P&G also offer investors similar dividend yields at 3%. However, while P&G pays out only 59% of its earnings in dividends, Kimberly-Clark's payout ratio is a bit higher at 65%. Unilever's payout ratio is quite decent at 60%.

Which stock should you choose?
With its leading market position, product innovation, and strong growth in international markets, Kimberly-Clark could deliver good returns and dividends to shareholders in the long run. Income investors might choose Unilever for its yield. Among the three, I prefer Procter & Gamble because it has the lowest payout ratio and a reasonable dividend yield. Furthermore, its $10 billion cost savings plan could certainly drive its operating margin higher, thus improving its earnings substantially in the next three years.