Kimberly-Clark: fairly valued with a margin of safety

I believe $KMB, at approximately $65/share is fairly valued with a margin of safety on a cash flow valuation basis.

Kimberly-Clark is a leading player in the global health and hygiene category selling bathroom tissues, diapers, feminine products, and paper towels. Its brands include Kleenex, Scott, Huggies, Pull-Ups, and Kotex. Kimberly sells its products directly and distributes them through supermarkets, mass merchandisers, and drugstores, among other outlets. Sales generated outside of North America account for about 45% of the firm's consolidated sales base.
(Source: Morningstar.com)

Kimberly-Clark Announces Year-End 2010 Results, 2011 Outlook and Actions to Enhance Shareholder Value

I estimated the firm's WACC at 7.06% using the Capital Asset Pricing Model and the company's recent SEC filings.  ValuePro has a baseline WACC calculator here and it calculates the firm's WACC at 6.36%.  I'll assume the slightly higher mark, 7.06%.  

Recent free cash flows and noted growth rates: 

Year	FCF $Millions
2000	963
2001	1154
2002	1554
2003	1735
2004	2435
2005	1602
2006	1607
2007	1440
2008	1610
2009	2633
2010	1780

Average Annual Growth: approx 11%
CAGR: approx. 6%
Consensus Forecast Industry 5-Year Growth: approx. 11% per year
Consensus Forecast Company 5-Year Growth: approx. 9% per year

Assuming the company achieves a slightly lower 5-year growth rate of 8% per year, and assuming that after the next five years, the company achieves no growth or 0% growth per year forever:

Discounted Cash Flow Valuation

Year	FCF $ Millions
0	1780
1	1922
2	2076
3	2242
4	2422
5	2615
Terminal Value	40033

The firm's future cash flows, discounted at a WACC of 7.06%, give a present value for the entire firm (Debt + Equity) of $37,598 million. If the firm's fair value of debt is estimated at $7,000 million, then the fair value of the firm's equity could be $30,598 million.

$30,598 million / 407 million outstanding shares is approx $75 per share. A 20% margin of safety from here is approx $60 so assuming all else at $KMB meets my standard for good business, I'd buy it today for the long term at $60 or less.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.