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Kohl's Corp KSS

Morningstar Rating
$25.04 +0.23 (0.93%)
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Company Report

Kohl's Earnings: Plans Taking Shape, but Slowly; Shares Very Undervalued

No-moat Kohl’s fourth-quarter results and initial 2024 guidance align with our forecasts. We believe the company is making progress on its initiatives under CEO Tom Kingsbury that include efforts to improve its offerings, simplify its promotions, operate more efficiently, and strengthen its balance sheet. While strong sales and margin improvement is unlikely before 2025, we believe Kohl's depressed results offer an opportunity to invest at a very attractive price. We do not expect to make any material change to our $50 fair value estimate.

Price vs Fair Value

KSS is trading at a 50% discount.
Price
$25.04
Fair Value
$97.00
Uncertainty
Very High
1-Star Price
$38.80
5-Star Price
$57.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Kohl’s yearly digital sales more doubled between 2015 and 2022 (to $5.5 billion from $2.7 billion), making it one of the largest online retailers in the U.S. Its large store base allows it to ship directly from stores and encourages buy online/pick up in stores.

Bears

Kohl’s Greatness Agenda and other plans have failed to produce sales growth, and operating margins have declined over the past decade. We anticipate below-market long-term sales growth of only 1%.

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News

Trading Information

Previous Close Price
$24.81
Day Range
$24.4825.20
52-Week Range
$17.6829.65
Bid/Ask
$24.50 / $25.00
Market Cap
$2.77 Bil
Volume/Avg
153 / 5.2 Mil

Key Statistics

Price/Earnings (Normalized)
Price/Sales
0.16
Dividend Yield (Trailing)
7.99%
Dividend Yield (Forward)
7.99%
Total Yield
8.46%

Company Profile

Kohl’s operates about 1,170 department stores in 49 states that sell moderately priced private-label and national brand clothing, shoes, accessories, cosmetics, and home furnishings. Most of these stores are in strip centers. Kohl’s also operates a large digital sales business. Women’s apparel is Kohl’s largest category, having generated 27% of its 2022 sales. The retailer, headquartered in Menomonee Falls, Wisconsin, opened its first department store in 1962.
Sector
Consumer Cyclical
Industry
Department Stores
Stock Style Box
Small Value
Total Number of Employees
97,000

Competitors

Valuation

Metric
KSS
ROST
TJX
Price/Earnings (Normalized)
28.5827.26
Price/Book Value
0.749.9715.02
Price/Sales
0.162.392.06
Price/Cash Flow
3.9120.1319.88
Price/Earnings
KSS
ROST
TJX

Financial Strength

Metric
KSS
ROST
TJX
Quick Ratio
0.051.060.43
Current Ratio
1.141.701.19
Interest Coverage
0.3427.6666.55
Quick Ratio
KSS
ROST
TJX

Profitability

Metric
KSS
ROST
TJX
Return on Assets (Normalized)
−0.84%13.30%14.72%
Return on Equity (Normalized)
−3.33%41.75%66.82%
Return on Invested Capital (Normalized)
0.75%17.00%21.84%
Return on Assets
KSS
ROST
TJX
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