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Category: Stock Market and Kohl's (KSS)
Date: 20 August 2020 Stock Price of Kohl's: $21.09 We take a look at the 2nd quarter 2020 earnings report of Kohl's a retailer with over 1 100 stores in 49 states. Revenues declined by -23.1% for the quarter compared to the same quarter of the previous year and the group recorded a very modest profit of $47 million. This while other retailers such as Home Depot, Target, Walmart all reported bumper profits and sharp increases in revenue. Kohl's is struggling, that's for sure
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We entered the year in a strong financial position and our business was tracking to our expectations prior to the onset of the crisis. We immediately responded with actions to protect the health and safety of our associates and customers and to preserve our financial position "
About Kohl's
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.
Kohl's store front. Image obtained from globalcosmeticnews.com
Overview of Kohl's 2nd quarter 2020 earnings report
The data refers to the latest quarter unless specified otherwise
- Total revenues: $3.407 billion (down from $4.430 billion for the same quarter of the previous year)
- Total revenues decreased by -23.1% over the last 12 months
- Cost of merchandise sold: $2.149 billion (down from $2.550 billion for the same quarter of the previous year)
- Cost of merchandise sold decreased by -15.7% over the last 12 months
- So margin gain taking place at Kohl's as revenues showed a decline of a lot slower than their cost of merchandise sold
- Net earnings: $47 million (down from $241 million for the same quarter of the previous year)
- Diluted earnings per share: $0.30 (down from $1.51 for the same quarter of the previous year)
- PE ratio of Kohl's: 16.3
- Diluted shares in issue: 155 million (down from 159 million for the same quarter of the previous year)
- Cash and cash equivalents: $2.428 billion
- Cash and equivalents per share: $15.67
- Cash and equivalents makes up 80% of Kohl's market capital
- Cash and equivalents makes up 15.9% of Kohl's total assets
- Merchandise inventories:: $2.689 billion
- Inventories makes up 17.7% of Kohl's total assets
- Stockholders equity in Kohl's: $4.837 billion
- Stockholders equity per Kohl's stock: $31.20
- So Kohl's is trading at times its 0.63 stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms then to trade at
- Cash generated from operations for the 6 months: $304 million
- Cash generated from operations per share for the 6 months : $1.96
Kohl's management commentary on their 2nd quarter 2020 earnings
MENOMONEE FALLS, Wis.--(BUSINESS WIRE)—August 18, 2020-- Kohl’s Corporation (NYSE:KSS) today reported results for the quarter ended August 1, 2020.
"Our organization continues to navigate through a period of extraordinary change and uncertainty presented by the COVID-19 crisis. During the second quarter we made significant progress in rebuilding our business. We reopened all of our stores with new safety and operating procedures, accelerated digital growth, and showed great discipline in managing inventory and expenses meaningfully lower. In doing so, we generated positive operating cash flow and further enhanced our financial position,” said Michelle Gass, Kohl’s chief executive officer.
“As we look ahead, we are planning for the crisis to continue to impact our business in the near-term,” said Gass. “We are well-positioned to capitalize on evolving customer behaviors and the retail industry disruption, which we believe will drive long-term growth and increased market share.”
"Our organization continues to navigate through a period of extraordinary change and uncertainty presented by the COVID-19 crisis. During the second quarter we made significant progress in rebuilding our business. We reopened all of our stores with new safety and operating procedures, accelerated digital growth, and showed great discipline in managing inventory and expenses meaningfully lower. In doing so, we generated positive operating cash flow and further enhanced our financial position,” said Michelle Gass, Kohl’s chief executive officer.
“As we look ahead, we are planning for the crisis to continue to impact our business in the near-term,” said Gass. “We are well-positioned to capitalize on evolving customer behaviors and the retail industry disruption, which we believe will drive long-term growth and increased market share.”
Highlights of the 2nd quarter 2020 for Kohl's (KSS)
- Strengthened financial position during the quarter, ending with $2.4 billion in cash
- Disciplined management of expenses and inventory resulted in positive operating cash flow
- Second quarter net sales decrease (22.9%)
- Second quarter diluted earnings per share of $0.30; adjusted loss per share(2) of ($0.25)
Kohl's (KSS) stock price history
The image below, obtained from Google shows the stock price history of Kohl's (NYSE:KSS) for the last 5 years and it's not been a good time for Kohl's stockholders over the last 5 years. 5 years ago the stock was trading at $52.30 and its currently trading at $19.58 That's a loss of -60.2% suffered by Kohl's stockholders over the last 5 years.
The stock of Kohl's is trading at a lot closer to its 52 week low of $10.89 than it is to its 52 week high of $59.28 which to us is a clear indication that the short term sentiment and momentum of Kohl's stock is negative at this point in time.
The stock of Kohl's is trading at a lot closer to its 52 week low of $10.89 than it is to its 52 week high of $59.28 which to us is a clear indication that the short term sentiment and momentum of Kohl's stock is negative at this point in time.
Kohl's (NYSE: KSS) stock price history over the last 5 years
Kohl's (KSS) stock vs Kroger Company (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. The summary below shows the returns provided by the two retailers over the last 5 years
- Kroger (KR): -2.5%
- Kohl's (KSS): -60.2%
Kohl's (KSS) stock vs Kroger Company (KR) stock over the last 5 years
Recent coverage of Kohl's
The extract below covers the latest regarding Kohl's as obtained from Barrons.com
What happened
Shares of Kohl's (NYSE:KSS) got crushed on Tuesday, after the company reported results for the second quarter of 2020. After the initial report, the stock was up modestly. But once it held its conference call to discuss its quarterly results, the stock began to fall. As of 11:30 a.m. EDT, Kohl's stock was down 16%.
So what
Kohl's had a rough Q2 with all of its locations closed for at least some of the quarter. Still, the company reported top- and bottom-line results ahead of analysts' expectations. Revenue was "only" down 23% year over year to $3.4 billion. Considering it had 25% fewer operating days than last year, this was actually relatively strong.
Furthermore, Kohl's reported free cash flow of $196 million, compared to just $67 million in the second quarter last year. This also appears positive on the surface. But investors should consider its free cash flow simply resulted from spending less. Specifically, it didn't quickly replenish inventory; inventory was down 26% year over year. It also completed a sales-leaseback transaction, giving the mid-cap company an infusion of cash. Kohl's demonstrated discipline by spending less than it made. But celebrating this kind of free cash flow is different from when a company's margin is expanding.
Read the full article here
What happened
Shares of Kohl's (NYSE:KSS) got crushed on Tuesday, after the company reported results for the second quarter of 2020. After the initial report, the stock was up modestly. But once it held its conference call to discuss its quarterly results, the stock began to fall. As of 11:30 a.m. EDT, Kohl's stock was down 16%.
So what
Kohl's had a rough Q2 with all of its locations closed for at least some of the quarter. Still, the company reported top- and bottom-line results ahead of analysts' expectations. Revenue was "only" down 23% year over year to $3.4 billion. Considering it had 25% fewer operating days than last year, this was actually relatively strong.
Furthermore, Kohl's reported free cash flow of $196 million, compared to just $67 million in the second quarter last year. This also appears positive on the surface. But investors should consider its free cash flow simply resulted from spending less. Specifically, it didn't quickly replenish inventory; inventory was down 26% year over year. It also completed a sales-leaseback transaction, giving the mid-cap company an infusion of cash. Kohl's demonstrated discipline by spending less than it made. But celebrating this kind of free cash flow is different from when a company's margin is expanding.
Read the full article here
Kohl's store entrance inside a mall. Image obtained from Greenwichtime.com
Kohl's (NYSE: KSS) latest stock valuation
So what is Kohl's stock worth based on their 2nd quarter 2020 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Kohl's at $43.20 a stock. We therefore believe the stock of Kohl's is undervalued
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $43.20 thus a good entry point into Kohl's would be at $38.90 or below.
We expect the stock of Kohl's stock price to recover in coming weeks and months as the Covid-19 pandemic subsides to levels closer to our target price (full value price). Since the stock of Kohl's is trading at well below our suggested entry point we rate the stock of Kohl's as a Buy
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $43.20 thus a good entry point into Kohl's would be at $38.90 or below.
We expect the stock of Kohl's stock price to recover in coming weeks and months as the Covid-19 pandemic subsides to levels closer to our target price (full value price). Since the stock of Kohl's is trading at well below our suggested entry point we rate the stock of Kohl's as a Buy
Next earnings release for Kohl's
It is expected that Kohl's will release their 3rd quarter 2020 earnings report towards the end of November 2020