Back to top

Image: Bigstock

Can Kohl's (KSS) Diligent Moves Retain Solid Momentum?

Read MoreHide Full Article

Kohl's Corporation (KSS - Free Report) looks quite promising buoyed by its strong brand portfolio, innovative strategies and better-than-expected third-quarter fiscal 2016 results. Notably, the stock has surged a whopping 54.4% in the past six months, clearly outperforming the Zacks categorized Retail-Regional Department Stores industry, which noted growth of 33.3%. Also, it exhibits a long-term earnings growth rate of 8.8%, with a VGM Score of “A,” instilling confidence about its momentum.



Driven by these factors, this Zacks Rank #3 (Hold) company hit a 52-week high of $59.67 yesterday, though it eventually closed at $59.43. Moreover, the estimates have witnessed an uptrend. Over the past 30 days, both the Zacks Consensus Estimate of $3.93 and $4.21 for fiscal 2016 and fiscal 2017, respectively, increased 7 cents.

Kohl’s regularly introduces new brands in order to keep the inventory assortment fresh and drive customer traffic to its stores and website. Additionally, the company has been experiencing notable growth in its e-commerce business for the last few years. Moreover, Kohl’s has been making significant technology investments to support its online business and fortify its omni-channel platform.

Looking at the company’s performance, we note that it delivered better-than-expected results in the fiscal third quarter, wherein both earnings and revenues exceeded estimates. Moreover, the bottom line increased year-over-year.

However, sales declined on a yearly basis, due to a challenging sales environment and lower comparable store sales (comps). This signals that the company’s strategic initiative – ‘Greatness Agenda’ – which began in first-quarter fiscal 2014, to increase transactions per store and sales, has been reflecting weakness, of late. Moreover, comps declined in the first three quarters of fiscal 2016, which is raising concerns for the near term.

Nonetheless, management remains optimistic on its initiative to drive sales over the long term. Further, Kohl’s is making consistent efforts to improve its base business and gear up for the holiday season.

KOHLS CORP Price and Consensus

KOHLS CORP Price and Consensus | KOHLS CORP Quote

We expect the aforementioned factors to help the company sustain its sturdy 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 that Warrant a Look

Some better-ranked stocks in the retail space include The Children's Place, Inc. PLCE, Tilly's, Inc. TLYS and Zumiez Inc. ZUMZ, all flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Children's Place, with a long-term earnings growth rate of 10.3%, has gained roughly 98.6% year to date.

Tilly’s, with a long-term earnings growth rate of 15.5%, has skyrocketed 133.3% in the past six months.

Zumiez, with a long-term earnings growth rate of 15%, has jumped 71.6% year to date.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Kohl's Corporation (KSS) - free report >>

Published in