Better Buy: The Procter & Gamble Company vs. Kimberly-Clark

Consumer staples stocks give investors the comfort of reliable customer demand for the products companies make, and Procter & Gamble (NYSE: PG) and Kimberly-Clark (NYSE: KMB) together command dozens of billion-dollar brands known the world over. The two giants in the industry have done a good job of carving up the market and capitalizing on opportunities in many different niches of the business, and savvy investors want to know which of these two successful companies has the more attractive stocks right now. The factors discussed below should tell you what you need to know to make an informed decision that's consistent with your investing strategy and financial goals.

Over the past year, the performance of these two stocks has been tepid at best. Procter & Gamble has at least eked out a modest gain of 4% since July 2016, although that dramatically underperformed the stock market overall. Kimberly-Clark stock has fared much worse, falling 7% in price over the same period.

Turning to valuation, the two stocks weigh in with mixed results. If you look solely at earnings over the past 12 months, then P&G looks to be less expensive on a simple valuation basis, trading at 16 times trailing earnings compared to 20 times earnings for Kimberly-Clark. However, if you incorporate near-term future estimates for earnings, then the two stocks switch positions. Kimberly-Clark trades at just 18 times forward earnings, while Procter & Gamble climbs to a forward multiple of nearly 22. That latter comparison appears to be more consistent with the gain in stock price that P&G has seen relative to Kimberly-Clark recently.

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Source: Fool.com