Should You Buy KMB Right Now? (Stock Forecast)

Kimberly-Clark Research Report

Summary

Neural networks, as an intelligent data mining method, have been used in many different challenging pattern recognition problems such as stock market prediction. However, there is no formal method to determine the optimal neural network for prediction purpose in the literature. In this paper, two kinds of neural networks, a feed forward multi layer Perceptron (MLP) and an Elman recurrent network, are used to predict a company's stock value based on its stock share value history. We evaluate Kimberly-Clark prediction models with Modular Neural Network (Market Direction Analysis) and Stepwise Regression^1,2,3,4 and conclude that the KMB stock is predictable in the short/long term. According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Hold KMB stock.

Key Points

1. Game Theory
2. Which neural network is best for prediction?
3. Market Signals

KMB Target Price Prediction Modeling Methodology

We consider Kimberly-Clark Stock Decision Process with Modular Neural Network (Market Direction Analysis) where A is the set of discrete actions of KMB stock holders, F is the set of discrete states, P : S × F × S → R is the transition probability distribution, R : S × F → R is the reaction function, and γ ∈ [0, 1] is a move factor for expectation.^1,2,3,4

F(Stepwise Regression)^5,6,7= $\begin{array}{cccc}{p}_{\mathrm{a}1}& p_{\mathrm{a}2}& \dots & p_{1n}\\ & ⋮\\ p_{j1}& p_{j2}& \dots & p_{jn}\\ & ⋮\\ p_{k1}& p_{k2}& \dots & p_{kn}\\ & ⋮\\ p_{n1}& p_{n2}& \dots & p_{nn}\end{array}$ X R(Modular Neural Network (Market Direction Analysis)) X S(n):→ (n+16 weeks) $\begin{array}{l}\int e^x\mathrm{rx}\end{array}$

n:Time series to forecast

p:Price signals of KMB stock

j:Nash equilibria (Neural Network)

k:Dominated move

a:Best response for target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do AC Investment Research machine learning (predictive) algorithms actually work?

KMB Stock Forecast (Buy or Sell) for (n+16 weeks)

Sample Set: Neural Network
Stock/Index: KMB Kimberly-Clark
Time series to forecast n: 20 Nov 2022 for (n+16 weeks)

According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Hold KMB stock.

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Yellow to Green): *Technical Analysis%

Adjusted IFRS* Prediction Methods for Kimberly-Clark

1. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss. If such a mismatch would not be created or enlarged, the entity is required to present the effects of changes in the liability's credit risk in other comprehensive income.
2. An entity need not undertake an exhaustive search for information but shall consider all reasonable and supportable information that is available without undue cost or effort and that is relevant to the estimate of expected credit losses, including the effect of expected prepayments. The information used shall include factors that are specific to the borrower, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date. An entity may use various sources of data, that may be both internal (entity-specific) and external. Possible data sources include internal historical credit loss experience, internal ratings, credit loss experience of other entities and external ratings, reports and statistics. Entities that have no, or insufficient, sources of entityspecific data may use peer group experience for the comparable financial instrument (or groups of financial instruments).
3. The expected credit losses on a loan commitment shall be discounted using the effective interest rate, or an approximation thereof, that will be applied when recognising the financial asset resulting from the loan commitment. This is because for the purpose of applying the impairment requirements, a financial asset that is recognised following a draw down on a loan commitment shall be treated as a continuation of that commitment instead of as a new financial instrument. The expected credit losses on the financial asset shall therefore be measured considering the initial credit risk of the loan commitment from the date that the entity became a party to the irrevocable commitment.
4. Changes in market conditions that give rise to market risk include changes in a benchmark interest rate, the price of another entity's financial instrument, a commodity price, a foreign exchange rate or an index of prices or rates.

*International Financial Reporting Standards (IFRS) are a set of accounting rules for the financial statements of public companies that are intended to make them consistent, transparent, and easily comparable around the world.

Conclusions

Kimberly-Clark assigned short-term B3 & long-term B1 forecasted stock rating. We evaluate the prediction models Modular Neural Network (Market Direction Analysis) with Stepwise Regression^1,2,3,4 and conclude that the KMB stock is predictable in the short/long term. According to price forecasts for (n+16 weeks) period: The dominant strategy among neural network is to Hold KMB stock.

Financial State Forecast for KMB Kimberly-Clark Stock Options & Futures

Rating	Short-Term	Long-Term Senior
Outlook*	B3	B1
Operational Risk	64	57
Market Risk	32	32
Technical Analysis	54	78
Fundamental Analysis	66	77
Risk Unsystematic	36	50

Prediction Confidence Score

Trust metric by Neural Network: 75 out of 100 with 773 signals.

References

1. Li L, Chen S, Kleban J, Gupta A. 2014. Counterfactual estimation and optimization of click metrics for search engines: a case study. In Proceedings of the 24th International Conference on the World Wide Web, pp. 929–34. New York: ACM
2. Breiman L. 1996. Bagging predictors. Mach. Learn. 24:123–40
3. Hartford J, Lewis G, Taddy M. 2016. Counterfactual prediction with deep instrumental variables networks. arXiv:1612.09596 [stat.AP]
4. Byron, R. P. O. Ashenfelter (1995), "Predicting the quality of an unborn grange," Economic Record, 71, 40–53.
5. Keane MP. 2013. Panel data discrete choice models of consumer demand. In The Oxford Handbook of Panel Data, ed. BH Baltagi, pp. 54–102. Oxford, UK: Oxford Univ. Press
6. Cheung, Y. M.D. Chinn (1997), "Further investigation of the uncertain unit root in GNP," Journal of Business and Economic Statistics, 15, 68–73.
7. K. Boda, J. Filar, Y. Lin, and L. Spanjers. Stochastic target hitting time and the problem of early retirement. Automatic Control, IEEE Transactions on, 49(3):409–419, 2004

Frequently Asked Questions

Q: What is the prediction methodology for KMB stock?
A: KMB stock prediction methodology: We evaluate the prediction models Modular Neural Network (Market Direction Analysis) and Stepwise Regression
Q: Is KMB stock a buy or sell?
A: The dominant strategy among neural network is to Hold KMB Stock.
Q: Is Kimberly-Clark stock a good investment?
A: The consensus rating for Kimberly-Clark is Hold and assigned short-term B3 & long-term B1 forecasted stock rating.
Q: What is the consensus rating of KMB stock?
A: The consensus rating for KMB is Hold.
Q: What is the prediction period for KMB stock?
A: The prediction period for KMB is (n+16 weeks)

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