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Kohl's (KSS) Up 1.9% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Kohl's Corporation (KSS - Free Report) . Shares have added about 1.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Kohl's Beats on Q1 Earnings, Sales Miss Estimates
Kohl’s Corporation delivered better-than-expected earnings in first-quarter fiscal 2017. Revenues however marginally missed the consensus mark.
Kohl’s reported adjusted earnings of $0.39 per share, beating the Zacks Consensus Estimate of $0.28 by 39.3%. In fact, the company has posted earnings surprise in six of the past seven quarters. Earnings also grew 26% from the prior-year quarter owing to margin improvement, driven by strong inventory and expense management.
Sales and Margins
Net sales of $3.843 billion marginally missed the Zacks Consensus Estimate of $3.864 billion. Also, it declined 3.2% from the prior-year quarter due to a challenging sales environment and lower comparable store sales (comps).
Comps dropped 2.7% in the first quarter, wider than the preceding quarter’s decline of 2.2%. This signals that the company’s strategic initiative ‘Greatness Agenda’ is failing to deliver results. The initiative, which commenced 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 were declining, thus posing a concern. Further, comps started declining since first-quarter fiscal 2016 and plummeted consecutively for the next five quarters, including the current one.
We note that Kohl’s has been 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. Highly competitive market from online retailers is also hindering sales of Kohl's and its competitors.
However, comps decline was narrower than the year-ago quarter’s decline of 3.9%. This is due to the significant improvement in sales and traffic in the months of March and April, despite the sluggish growth trend witnessed by the company in February.
Gross margin also increased 83 basis points to 36.4% in the reported quarter. Operating margin also improved 53 basis points to 4.8% owing to lower selling, general and administrative expenses.
Other Financial Details
As of Apr 29, Kohl’s had $625 million of cash and cash equivalents, $2.79 billion of long-term debt and $4.99 billion of shareholders’ equity. Cash flow from operations were $46 million, while capital expenditure were $216 million.
On May 10, the Kohl's board declared a quarterly cash dividend of $0.55 per share, which will be paid on Jun 21, to shareholders of record as of Jun 7.
Kohl’s ended the year with 1,154 Kohl's stores, 12 FILA Outlet stores, and three Off/Aisle clearance centers in 49 states.
Fiscal 2017 Outlook
The company did not provide any update on fiscal 2017 outlook in the current quarter. In fourth-quarter fiscal 2016, management had anticipated earnings in the range of $3.50−$3.80 per share for fiscal 2017. Management expects sales to be up 0.7% to down 1.3%, which includes sales of approximately $160 million in the 53rd week. Comparable sales are expected to be flat to down 2%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Kohl's stock has a nice Growth Score of 'B', however its Momentum is lagging a lot with 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Kohl's (KSS) Up 1.9% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Kohl's Corporation (KSS - Free Report) . Shares have added about 1.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Kohl's Beats on Q1 Earnings, Sales Miss Estimates
Kohl’s Corporation delivered better-than-expected earnings in first-quarter fiscal 2017. Revenues however marginally missed the consensus mark.
Kohl’s reported adjusted earnings of $0.39 per share, beating the Zacks Consensus Estimate of $0.28 by 39.3%. In fact, the company has posted earnings surprise in six of the past seven quarters. Earnings also grew 26% from the prior-year quarter owing to margin improvement, driven by strong inventory and expense management.
Sales and Margins
Net sales of $3.843 billion marginally missed the Zacks Consensus Estimate of $3.864 billion. Also, it declined 3.2% from the prior-year quarter due to a challenging sales environment and lower comparable store sales (comps).
Comps dropped 2.7% in the first quarter, wider than the preceding quarter’s decline of 2.2%. This signals that the company’s strategic initiative ‘Greatness Agenda’ is failing to deliver results. The initiative, which commenced 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 were declining, thus posing a concern. Further, comps started declining since first-quarter fiscal 2016 and plummeted consecutively for the next five quarters, including the current one.
We note that Kohl’s has been 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. Highly competitive market from online retailers is also hindering sales of Kohl's and its competitors.
However, comps decline was narrower than the year-ago quarter’s decline of 3.9%. This is due to the significant improvement in sales and traffic in the months of March and April, despite the sluggish growth trend witnessed by the company in February.
Gross margin also increased 83 basis points to 36.4% in the reported quarter. Operating margin also improved 53 basis points to 4.8% owing to lower selling, general and administrative expenses.
Other Financial Details
As of Apr 29, Kohl’s had $625 million of cash and cash equivalents, $2.79 billion of long-term debt and $4.99 billion of shareholders’ equity. Cash flow from operations were $46 million, while capital expenditure were $216 million.
On May 10, the Kohl's board declared a quarterly cash dividend of $0.55 per share, which will be paid on Jun 21, to shareholders of record as of Jun 7.
Kohl’s ended the year with 1,154 Kohl's stores, 12 FILA Outlet stores, and three Off/Aisle clearance centers in 49 states.
Fiscal 2017 Outlook
The company did not provide any update on fiscal 2017 outlook in the current quarter. In fourth-quarter fiscal 2016, management had anticipated earnings in the range of $3.50−$3.80 per share for fiscal 2017. Management expects sales to be up 0.7% to down 1.3%, which includes sales of approximately $160 million in the 53rd week. Comparable sales are expected to be flat to down 2%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Kohl's Corporation Price and Consensus
Kohl's Corporation Price and Consensus | Kohl's Corporation Quote
VGM Scores
At this time, Kohl's stock has a nice Growth Score of 'B', however its Momentum is lagging a lot with 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.