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Category: Kohl's (KSS) and Kroger (KR)
Date: 23 July 2020 Stock price of Kohl's (KSS): $21.46 Stock price of Kroger (KR): $35.16 In our continued stock comparison articles we compare the stock of retailers Kohl's (KSS) and Kroger (KR). We compare their stock price performance as well as earnings reports in order to determine who comes out on top and who is best placed to outperform in coming years.
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While Kohl's (KSS) and Kroger (KR) are both active in the general retail sector in the USA their stock price performance is very different even though they operate in a very similar industry. "
More About Kohls (KSS)
Kohl’s (NYSE: KSS) is a leading omnichannel retailer with more than 1,100 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, Kohl’s offers amazing national and exclusive brands, incredible savings and an easy shopping experience in our stores, online at Kohls.com and on Kohl's mobile app. Since its founding, Kohl's has given more than $700 million to support communities nationwide, with a focus on family health and wellness.
Overview of Kohl's (KSS) latest earnings report
Overview of Kohl's (KSS) latest earnings report
- Total revenues: $2.428 billion (down from $4.087 billion for the same quarter of the previous year)
- Total revenues decreased by -40.5% over the last 12 months
- Cost of merchandise sold: $1.787 billion (down from $2.415 billion for the same quarter of the previous year)
- Cost of merchandise sold decreased by -26% over the last 12 months
- So margin squeeze taking place at Kohl's as revenues showed a decline of a lot faster than their cost of merchandise sold
- Net loss: -$541million (down from $161 million for the same quarter of the previous year)
- Diluted loss per share: -$3.50 (down from $0.39 for the same quarter of the previous year)
- PE ratio of Kohl's: Since Kohl's is currently loss making a PE ratio cannot be calculated
- Diluted shares in issue: 155 million (down from 162 million for the same quarter of the previous year)
- Cash and cash equivalents: $2.039 billion
- Cash and equivalents per share: $13.15
- Cash and equivalents makes up 62.4% of Kohl's market capital
- Cash and equivalents makes up 12.8% of Kohl's total assets
- Cash and equivalents per share: $13.15
- Merchandise inventories:: $3.557 billion
- Inventories makes up 22.4% of Kohl's total assets
- Stockholders equity in Kohl's: $4.790 billion
- Stockholders equity per Kohl's stock: $30.90
- So Kohl's is trading at times its 0.68 stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms then to trade at
- Stockholders equity per Kohl's stock: $30.90
More About Kroger (KR)
The Kroger Co. was founded in 1883 and incorporated in 1902. As of February 1, 2020, Kroger is one of the world’s largest retailers, as measured by revenue, operating 2,757 supermarkets under a variety of local banner names in 35 states and the District of Columbia. Of these stores, 2,270 have pharmacies and 1,567 have fuel centers. We offer Pickup (also referred to as ClickList®) and Harris Teeter ExpressLane™ — personalized, order online, pick up at the store services — at 1,989 of our supermarkets and provide home delivery service to 97% of Kroger households. We also operate an online retailer. We operate 35 food production plants, primarily bakeries and dairies, which supply approximately 31% of Our Brands units and 42% of the grocery category Our Brands units sold in our supermarkets; the remaining Our Brands items are produced to our strict specifications by outside manufacturers. Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our retail operations, which represent 97% of our consolidated sales, is our only reportable segment.
Quick facts about Kroger:
Quick facts about Kroger:
- Kroger Company is listed on the New York Stock Exchange under share code ticker: KR
- Number of employees of Kroger Company: 435 000
- Number of Kroger Company stores: 2 757
- 2270 of the stores had pharmacies
- 1567 had fuel centres
- Sales: $41.549 billion (up from $37.251 billion from the same quarter of the previous year)
- Sales increased by 11.5% over the last 12 months
- Net income: $1.212 billion (up from $772 million for the same quarter of the previous year)
- Net profit margin for Kroger: 2.9%
- Diluted earnings per share: $1.53 (up from $0.96 for the same quarter of the previous year)
- PE ratio of Kroger: 19.3
- Dividend declared for the quarter: $0.16 (up from $0.14 for the same quarter of the previous year)
- Dividend yield: 2%
- Diluted weighted-average shares outstanding: 788 million (down from 805 million for the same quarter of the previous year)
- Cash and cash equivalents: $425 million
- Cash and cash equivalents per share: $0.54
- Cash and cash equivalents makes up 1.7% of Kroger's market capital
- Cash and cash equivalents makes up 0.91 % of Kroger's total assets
- Cash and cash equivalents per share: $0.54
- Accounts receivable: $1.552 billion
- Accounts receivable makes up 3.3% of the Kroger's total assets.
- Inventories: $6.297 billion (up from $6.707 billion for the same quarter of the previous year)
- Inventories makes up 13.4% of Kroger's total assets
- Inventories declined by -6.1% over the last 12 months
- Stockholders equity in Kroger: $9.328 billion
- Stockholders equity per share: $11.83
- The Kroger Company is trading at 2.67 times its stockholders equity per share which is within the expected range of between 2 and 4 times that most firms tend to trade at
Kohl's (KSS) stock vs Kroger (KR) stock over the last 5 years
The image below shows the stock price performance of Kohl's (KSS) and Kroger (KR) over the last 5 years. While Kohl's (KSS) and Kroger (KR) are both active in the general retail sector in the USA their stock price performance is very different even though they operate in a very similar industry. Over the 5 year period the two firms provided the following returns to stockholders (sorted from best to worst)
- Kroger (KR): -8.91%
- Kohl's (KSS): -61.3%
So who is best position for future stock price growth? Kohl's (KSS) or Kroger (KR)
One of our key metrics is the Price to Stockholders equity per share ratio. When looking at this we find the following:
Based on this metric Kohl's offers far more value than Kroger. Most firms tend to trade at a ratio of between 2 and 4 times its stockholders equity per share. What it shows that if a firm was to be liquited now, all assets sold, liabilities paid and the rest paid out to stockholders, that amount is expressed as a ratio to the stock price. So for Kohl's the stock price is 0.69 times the value of what investors would get out if they were liquidated. For Kroger the stock price is 2.97 times what will be paid out of they were liquidated. This if both were liquidated investors stand to lose money if they own Kroger and set to make some money if they owned Kohl's
Next up cash as percentage of stock price:
Next up lets take a look at the percentage cash on the balance sheet makes up of each group's total assets:
- Price/Stockholders equity per share for Kohl's (KSS): 0.69
- Price/Stockholders equity per share for Kroger (KR) : 2.97
Based on this metric Kohl's offers far more value than Kroger. Most firms tend to trade at a ratio of between 2 and 4 times its stockholders equity per share. What it shows that if a firm was to be liquited now, all assets sold, liabilities paid and the rest paid out to stockholders, that amount is expressed as a ratio to the stock price. So for Kohl's the stock price is 0.69 times the value of what investors would get out if they were liquidated. For Kroger the stock price is 2.97 times what will be paid out of they were liquidated. This if both were liquidated investors stand to lose money if they own Kroger and set to make some money if they owned Kohl's
Next up cash as percentage of stock price:
- Cash as percentage of stock price for Kohl's (KSS): 61.3%
- Cash as percentage of stock price for Kroger (KR): 1.53%
Next up lets take a look at the percentage cash on the balance sheet makes up of each group's total assets:
- Cash as percentage of stock price for Kohl's (KSS): 12.8%
- Cash as percentage of stock price for Kroger (KR): 0.91%
Lets look at one of the most overused valuation metrics, the Price to Earnings Ratio (PE ratio)
So taking all the above into consideration who comes out on top? While Kohl's wins on the first three metrics, they are loss making while Kroger is still profitable. The problem with loss making firms is that they can burn through a lot of cash quickly in order to stay afloat or to pay for restructurings to return to profitability. That being said its due to this reason that we rate the stock of Kroger as the WINNER, in the battle between Kohl's and Kroger
- PE ratio of Kohl's (KSS): Kohl's is loss making and therefore no PE ratio can be calculated
- PE ratio of Kroger (KR) : 19.3
So taking all the above into consideration who comes out on top? While Kohl's wins on the first three metrics, they are loss making while Kroger is still profitable. The problem with loss making firms is that they can burn through a lot of cash quickly in order to stay afloat or to pay for restructurings to return to profitability. That being said its due to this reason that we rate the stock of Kroger as the WINNER, in the battle between Kohl's and Kroger
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