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Category: Stock Market and Khol's
Date: 20 November 2019 Stock Price: $47.02 We take a look at the 3rd quarter 2019 earnings report of Kohl's a retailer with over 1 100 stores in 49 states and annual sales around $19 billion. The stock of Kohl's plunged 20% after their latest earnings release as the market showed its disappointment
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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 3rd quarter 2019 earnings report
The data refers to the latest quarter unless specified otherwise
- Total revenues: $4.625 billion (down from $4.623 billion for the same quarter of the previous year)
- Total revenues decreased by -0.06% over the last 12 months
- Cost of merchandise sold: $2.775 billion (up from $2.752 billion for the same quarter of the previous year)
- Cost of merchandise sold increased by 0.83% over the last 12 months
- So margin squeeze taking place at Kohl's as revenues showed a decline but cost of merchandise sold showed an increase which means the firm is less profitabile and profit margins are being squeezed
- Net earnings: $123 million (down from $161 million for the same quarter of the previous year)
- Diluted earnings per share: $0.78 (down 20.4% from $0.98 for the same quarter of the previous year)
- PE ratio of Kohl's: 13.2
- Diluted shares in issue: 157 million (down 5.4% from 165 million for the same quarter of the previous year)
- So earnings per share declined by 20.4% from the same quarter of last year and this while the amount of shares in issue declined by 5.4% which is a good thing as future earnings are divided by less shares n in issue. So even with almost 6% less shares in issue the earnings per Kohl share declined by over 20%. It's no real surprise then that the stock of Kohl's plummeted yesterday after their earnings release.
- Cash and cash equivalents: $490 million
- Cash and equivalents per share: $3.12
- Cash and equivalents makes up 6.6% of Kohl's market capital
- Cash and equivalents makes up 3.1% of Kohl's total assets
- Merchandise inventories:: $4.887 billion
- Kohl's merchandise inventories increased by 0.08% over the last 12 months
- Inventories makes up 30.04% of Kohl's total assets
- Stockholders equity in Kohl's: $5.355 billion
- Stockholders equity per Kohl's stock: $34.10
- So Kohl's is trading at 1.37 times its 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 3 quarters of fiscal year): $1.045 billion
- Cash generated from operations per share (for 3 quarters of fiscal year) : $6.56
Kohl's management commentary on their 3rd quarter 2019 earnings
MENOMONEE FALLS, Wis.--(BUSINESS WIRE)—November 19, 2019-- Kohl’s Corporation (NYSE:KSS) today reported results for the quarter ended November 2, 2019.
Michelle Gass, Kohl's chief executive officer, said, "We are pleased to report that our business returned to growth during the third quarter, with a comparable sales increase of 0.4%. The quarter started off positive in August with another successful back-to-school season and ended strong in October. We enter the holiday period with momentum and are strategically increasing our investments to take advantage of the unique opportunity to fuel growth and customer acquisition. We believe that investing in the short-term will support our strategies to drive profitable growth over the long-term.”
Michelle Gass, Kohl's chief executive officer, said, "We are pleased to report that our business returned to growth during the third quarter, with a comparable sales increase of 0.4%. The quarter started off positive in August with another successful back-to-school season and ended strong in October. We enter the holiday period with momentum and are strategically increasing our investments to take advantage of the unique opportunity to fuel growth and customer acquisition. We believe that investing in the short-term will support our strategies to drive profitable growth over the long-term.”
Dividend
On November 13, 2019, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.67 per share. The dividend is payable December 24, 2019 to shareholders of record at the close of business on December 11, 2019.
Guidance
The Company now expects adjusted annual earnings per diluted share to be $4.75 to $4.95, which excludes $0.22 per diluted share related to the extinguishment of debt and impairments, store closing and other costs recognized in the first nine months of 2019, compared to its prior guidance of $5.15 to $5.45.
On November 13, 2019, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.67 per share. The dividend is payable December 24, 2019 to shareholders of record at the close of business on December 11, 2019.
Guidance
The Company now expects adjusted annual earnings per diluted share to be $4.75 to $4.95, which excludes $0.22 per diluted share related to the extinguishment of debt and impairments, store closing and other costs recognized in the first nine months of 2019, compared to its prior guidance of $5.15 to $5.45.
Kohl's 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 $58.20 and its currently trading at $47.02 That's a loss of -19.2% 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 $43.33 than it is to its 52 week high of $75.91 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
Recent coverage of Kohl's
The extract below covers the latest regarding Kohl's as obtained from TheStreet.com
It's not a great day in retail, with a number of names getting hit. Among the casualties is Kohl's (KSS - Get Report) , with the shares down 19%.
Macy's (M - Get Report) is down about 11%, while Home Depot (HD - Get Report) is off 5% after disappointing investors, too, as shares near critical support. Others are doing better -- TJX (TJX - Get Report) is up 2%.
For Kohl's, the disappointment was broad. The Menomenee Falls, Wis., company missed on earnings expectations and slashed its full-year profit outlook. Despite a low valuation and big dividend yield, investors are dumping this one hand over fist. To little surprise, the haircut is dealing a notable blow to the technicals. Perhaps to some surprise, the stock is not making 52-week lows on the move.
Read the full article here
It's not a great day in retail, with a number of names getting hit. Among the casualties is Kohl's (KSS - Get Report) , with the shares down 19%.
Macy's (M - Get Report) is down about 11%, while Home Depot (HD - Get Report) is off 5% after disappointing investors, too, as shares near critical support. Others are doing better -- TJX (TJX - Get Report) is up 2%.
For Kohl's, the disappointment was broad. The Menomenee Falls, Wis., company missed on earnings expectations and slashed its full-year profit outlook. Despite a low valuation and big dividend yield, investors are dumping this one hand over fist. To little surprise, the haircut is dealing a notable blow to the technicals. Perhaps to some surprise, the stock is not making 52-week lows on the move.
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 3rd quarter 2019 earnings report and their earnings guidance provided? Based on their earnings report and the fiscal guidance provided our valuation model provides a target (full value) price for Kohl's at $69.20 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 $69.20 thus a good entry point into Kohl's would be at $62.30 or below.
We expect the stock of Kohl's stock price to recover in coming weeks and months to levels closer to our target (full value) price.
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 $69.20 thus a good entry point into Kohl's would be at $62.30 or below.
We expect the stock of Kohl's stock price to recover in coming weeks and months to levels closer to our target (full value) price.
Next earnings release for Kohl's
It is expected that Kohl's will release their 4th quarter and full fiscal 2019 earnings report towards the end of February 2020