We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Kohl's Corp (KSS) Gains Despite Headwinds: Should We Hold?
Read MoreHide Full Article
Despite the prevailing headwinds, Kohl’s Corporation (KSS - Free Report) has exhibited a bullish run in the index over the past one year. We noted that in the said period the stock has surged 14.9% and comfortably outperformed the Zacks categorized Retail-Regional Department Stores industry, which showcased growth of just 7.2%. We believe there still much momentum left in the stock, which is quite evident from its VGM Score of “A” and long-term earnings growth rate of 8.8%.
What further makes us optimistic about its performance in the near term is its uptrend in estimates. The Zacks Consensus Estimate for fiscal 2017 and 2018 has been rising over the past 30 days. Estimates rose 1.8% to $3.93 in fiscal 2017, while it increased 1.9% to $4.21 in fiscal 2018 over the past 30 days.
The retailer delivered better-than-expected earnings and revenues in the third quarter of fiscal 2016 on Nov 10, amid a difficult sales scenario. In fact, the company has delivered positive earnings surprises in three out of the last four quarters, making for an average positive surprise of 6.2%. During the third quarter, earnings increased 7% driven by better expense management. However, net sales declined 2.3% due to a challenging sales environment and soft comparable store sales.
We also note that Kohl’s Corporation’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 all the four quarters of fiscal 2015, the quarterly growth rates moderated gradually, thus posing a concern. Moreover, comps declined in the first three quarters of fiscal 2016. This is raising concerns over the near term.
The company is also witnessing lower spending on apparel and accessories, dwindling store traffic, competition from discount retailers and cautious consumer spending are hurting sales at department stores.
Nevertheless, we believe the concerns are short term and therefore leave space for this Zacks Rank #3 (Hold) company to rebound in the long run. The company also remains optimistic on its initiative for the long term. Further, Kohl’s is making continuous efforts to improve its base business and gearing up for the holiday season.
We expect the aforementioned factors to help the company sustain its strong momentum and stay afloat even amid difficult times. Hence, we suggest investors to hold on to the stock as the rest is a wait-and-watch story.
While Best Buy has an expected earnings growth rate of 11.39%, Tilly’s and Children’s Place’s have an expected earnings growth rate of 15.50% and 10.33%, respectively.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Kohl's Corp (KSS) Gains Despite Headwinds: Should We Hold?
Despite the prevailing headwinds, Kohl’s Corporation (KSS - Free Report) has exhibited a bullish run in the index over the past one year. We noted that in the said period the stock has surged 14.9% and comfortably outperformed the Zacks categorized Retail-Regional Department Stores industry, which showcased growth of just 7.2%. We believe there still much momentum left in the stock, which is quite evident from its VGM Score of “A” and long-term earnings growth rate of 8.8%.
What further makes us optimistic about its performance in the near term is its uptrend in estimates. The Zacks Consensus Estimate for fiscal 2017 and 2018 has been rising over the past 30 days. Estimates rose 1.8% to $3.93 in fiscal 2017, while it increased 1.9% to $4.21 in fiscal 2018 over the past 30 days.
The retailer delivered better-than-expected earnings and revenues in the third quarter of fiscal 2016 on Nov 10, amid a difficult sales scenario. In fact, the company has delivered positive earnings surprises in three out of the last four quarters, making for an average positive surprise of 6.2%. During the third quarter, earnings increased 7% driven by better expense management. However, net sales declined 2.3% due to a challenging sales environment and soft comparable store sales.
KOHLS CORP Price, Consensus and EPS Surprise
KOHLS CORP Price, Consensus and EPS Surprise | KOHLS CORP Quote
We also note that Kohl’s Corporation’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 all the four quarters of fiscal 2015, the quarterly growth rates moderated gradually, thus posing a concern. Moreover, comps declined in the first three quarters of fiscal 2016. This is raising concerns over the near term.
The company is also witnessing lower spending on apparel and accessories, dwindling store traffic, competition from discount retailers and cautious consumer spending are hurting sales at department stores.
Nevertheless, we believe the concerns are short term and therefore leave space for this Zacks Rank #3 (Hold) company to rebound in the long run. The company also remains optimistic on its initiative for the long term. Further, Kohl’s is making continuous efforts to improve its base business and gearing up for the holiday season.
We expect the aforementioned factors to help the company sustain its strong momentum and stay afloat even amid difficult times. Hence, we suggest investors to hold on to the stock as the rest is a wait-and-watch story.
Stocks to Consider
Some better-ranked stocks in the broader retail sector includes Best Buy, Inc. (BBY - Free Report) , Tilly’s Inc. (TLYS - Free Report) and The Children's Place, Inc. (PLCE - Free Report) . All of them sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
While Best Buy has an expected earnings growth rate of 11.39%, Tilly’s and Children’s Place’s have an expected earnings growth rate of 15.50% and 10.33%, respectively.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>