Standalone earnings near $7.40 next year. After new shares and extra interest, cash earnings sit near $6.70. Sixteen times that is $107, a market-like return from $104.
Key points
- $4,134 million of preliminary third-quarter sales, organic down 1.3 percent as category growth slowed to 1.7 percent.
- $7.15 of 2026 adjusted continuing earnings per share on my count, before the Kenvue share issuance.
- $6.69 of 2027 combined cash earnings after 281 million new shares, extra interest, and modest year-one synergies.
The call
The $104 stock pays 14.6 times my $7.15 of 2026 standalone adjusted earnings and a 4.9 percent dividend. That multiple is fair for a tissue and diaper franchise whose organic sales just turned negative and whose category is slowing.
I believe the next twelve months are about closing Kenvue, not a rerating. After 281 million new shares and extra interest, cash earnings fall to about $6.69. Sixteen times that is $107. The market is about right: it is paying a staples multiple for a larger, more levered company.
Adjusted EPS: standalone versus combined after KenvueCompany reports and September 2026 pro forma; 2026-27E are mine
Organic sales growth versus category growth- Organic sales %
- Category growth %
Company releases through Oct 15 2026; Q3 2026 is preliminary
Valuation
| Item | Figure |
|---|
| 2026E standalone adjusted EPS | $7.15 |
| 2027E standalone EPS | $7.36 |
| Combined 2027 cash EPS (after shares, interest, $200 million pretax synergies) | $6.69 |
| Multiple on combined cash EPS | 16 times |
| 12-month target | $107 |
Sixteen times is a normal consumer-staples multiple once the deal closes and leverage rises. The old share keeps the $5.10 dividend, so total return is still only a few points. Asymmetry is modest: a 10 percent miss on combined earnings cuts the target to about $96; a faster synergy run lifts it toward $115. That band is a hold, not a buy.
Risks
- Kenvue close slips past early 2027, leaving deal costs without the cash earnings.
- China diaper sellout stays weak and North America destocking repeats, pushing organic sales more than 2 percent below category.
- Pulp or energy costs jump before productivity offsets them, compressing the 16-times multiple.
What would change my mind
A closed deal plus 2027 combined cash guidance above $7.20 a share, or a standalone organic recovery that holds 2 percent above category for two quarters.