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Will Lower Spending Dampen Kohl's (KSS) Earnings in Q2?
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Kohl’s Corporation (KSS - Free Report) is set to report second-quarter 2016 results before the opening bell on Aug 11. Last quarter, this specialty retailer posted a negative surprise of 13.89%.
In fact, the company has posted an average negative surprise of 2.35% in the trailing four-quarters.
Let’s see how things are shaping up prior to the announcement.
Kohl’s is struggling since the past many quarters to boost its sluggish top line. Lower spending on apparel and accessories and a general slowdown in consumer spending are hurting sales at department stores.
The company remains cautious about its fiscal 2016 results and plans to close 18 stores, due to retail uncertainty as well as cautious spending by U.S. consumers.
Also, Kohl’s turnaround initiative named “Greatness Agenda” is showing weakness of late. The initiative, which began in the first quarter of 2014, was designed to increase transactions per store and sales. Though the plan has helped the company to deliver positive comps in the first, second and third quarters of 2015 and fourth quarter 2014, after persistent declines for more than a year; the quarterly growth rates have gradually decelerated. This raises concerns. Estimates for the second quarter of 2016 have also gone down over the past 30 days.
Earnings Whispers?
Our proven model does not conclusively show that Kohl’s is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for Kohl’s is -1.92% as the Most Accurate Estimate of $1.02 is lower than the Zacks Consensus Estimate of $1.04 per share.
Zacks Rank: Kohl’s carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Stocks in the broader retail sector that have both a positive earnings ESP and a favorable Zacks Rank and are therefore worth considering include:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , with an Earnings ESP of +2.27% and a Zacks Rank #1.
Jack in the Box Inc. (JACK - Free Report) with an Earnings ESP of +2.20% and a Zacks Rank #2.
Carrols Restaurant Group Inc. (TAST - Free Report) with an Earnings ESP of +4.35% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Will Lower Spending Dampen Kohl's (KSS) Earnings in Q2?
Kohl’s Corporation (KSS - Free Report) is set to report second-quarter 2016 results before the opening bell on Aug 11. Last quarter, this specialty retailer posted a negative surprise of 13.89%.
In fact, the company has posted an average negative surprise of 2.35% in the trailing four-quarters.
Let’s see how things are shaping up prior to the announcement.
KOHLS CORP Price and EPS Surprise
KOHLS CORP Price and EPS Surprise | KOHLS CORP Quote
Factors to Consider
Kohl’s is struggling since the past many quarters to boost its sluggish top line. Lower spending on apparel and accessories and a general slowdown in consumer spending are hurting sales at department stores.
The company remains cautious about its fiscal 2016 results and plans to close 18 stores, due to retail uncertainty as well as cautious spending by U.S. consumers.
Also, Kohl’s turnaround initiative named “Greatness Agenda” is showing weakness of late. The initiative, which began in the first quarter of 2014, was designed to increase transactions per store and sales. Though the plan has helped the company to deliver positive comps in the first, second and third quarters of 2015 and fourth quarter 2014, after persistent declines for more than a year; the quarterly growth rates have gradually decelerated. This raises concerns. Estimates for the second quarter of 2016 have also gone down over the past 30 days.
Earnings Whispers?
Our proven model does not conclusively show that Kohl’s is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for Kohl’s is -1.92% as the Most Accurate Estimate of $1.02 is lower than the Zacks Consensus Estimate of $1.04 per share.
Zacks Rank: Kohl’s carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Stocks in the broader retail sector that have both a positive earnings ESP and a favorable Zacks Rank and are therefore worth considering include:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , with an Earnings ESP of +2.27% and a Zacks Rank #1.
Jack in the Box Inc. (JACK - Free Report) with an Earnings ESP of +2.20% and a Zacks Rank #2.
Carrols Restaurant Group Inc. (TAST - Free Report) with an Earnings ESP of +4.35% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>