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 (KSS) Up 4.4% Since Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Kohl's Corporation (KSS - Free Report) . Shares have added about 4.4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is KSS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Kohl’s posted fourth-quarter fiscal 2017 results, with the top and bottom line improving year over year and beating the Zacks Consensus Estimate. While this marked Kohl’s third consecutive sales beat, earnings reverted to the positive surprise track after delivering a miss in the previous quarter.
Adjusted earnings per share of $1.87 surpassed the Zacks Consensus Estimate of $1.77 and jumped 29.9% from $1.44 recorded in the year-ago period. Including the impact of state tax settlement, earnings soared about 38% to $1.99 per share. On a reported basis, earnings jumped considerably to $2.81 per share.
The bottom line was backed by solid sales and enhanced gross margin. Also, earnings gained from an additional week in the fourth quarter of this fiscal year.
Sales and Margins
Fourth-quarter net sales came in at $6,776 million, which beat the Zacks Consensus Estimate of $6,737 million and advanced 9.2% year over year. Sales benefited from an additional week, wherein the company generated roughly $170 million in total sales.
Further, comparable store sales (comps) rose 6.3% against a 2.2% dip recorded in the year-ago period. It looks like the company’s strategic initiative, Greatness Agenda, is yielding results. The initiative, which commenced in first-quarter 2014, was designed to drive transactions per store and sales.
Gross margin expanded 43 bps to 33.8% in the reported quarter. Selling, general and administrative expenses increased 7.3% to $1,459 million.
However, management is pleased with its improved merchandise margins, which in turn was a result of efficient inventory management and better promotional and permanent markdowns. Notably, the company ended fiscal 2017 with inventory down 7% year over year. Also, expenses were managed well across all business areas.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $1,308 million, long-term debt of $2,797 million and shareholders’ equity of $5,426 million. Cash flow from operations amounted to $1,691 million during the fiscal.
On Feb 28, Kohl's declared an 11% hike in its quarterly cash dividend, taking it from 55 cents per share to 61 cents. The new dividend is payable on Mar 28 to shareholders of record as of Mar 14.
The company opened four new stores, while it relocated one namesake store during fiscal 2017. Also, it opened an Off/Aisle location during the same time period. Kohl’s ended fiscal 2017 with 1,158 stores across 49 states.
Guidance
Management remains impressed with its solid sales trends and better-than-expected results in fiscal 2017. For fiscal 2018, the company anticipates comps growth in the range of flat to a rise of 2%, while sales growth is expected in a band of negative 1% to positive 1%.
Further, gross margin is estimated to rise 10 bps from fiscal 2017, whereas SG&A expenses are estimated to grow in the 1-2% range. Also, management expects interest costs of $280 million and an effective tax rate between 24% and 25%. Consequently, Kohl’s envisions earnings for fiscal 2018 in the range of $4.95-$5.45 per share.
Kohl’s projects capital expenditures for fiscal 2018 to be roughly $700 million and share buybacks of $300-$400 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted by 7.5% due to these changes.
At this time, KSS has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, 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 equally suitable for value, growth, and momentum investors.
Outlook
KSS has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Kohl's (KSS) Up 4.4% 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 4.4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is KSS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Kohl's Q4 Earnings & Sales Beat Estimates, Increase Y/Y
Kohl’s posted fourth-quarter fiscal 2017 results, with the top and bottom line improving year over year and beating the Zacks Consensus Estimate. While this marked Kohl’s third consecutive sales beat, earnings reverted to the positive surprise track after delivering a miss in the previous quarter.
Adjusted earnings per share of $1.87 surpassed the Zacks Consensus Estimate of $1.77 and jumped 29.9% from $1.44 recorded in the year-ago period. Including the impact of state tax settlement, earnings soared about 38% to $1.99 per share. On a reported basis, earnings jumped considerably to $2.81 per share.
The bottom line was backed by solid sales and enhanced gross margin. Also, earnings gained from an additional week in the fourth quarter of this fiscal year.
Sales and Margins
Fourth-quarter net sales came in at $6,776 million, which beat the Zacks Consensus Estimate of $6,737 million and advanced 9.2% year over year. Sales benefited from an additional week, wherein the company generated roughly $170 million in total sales.
Further, comparable store sales (comps) rose 6.3% against a 2.2% dip recorded in the year-ago period. It looks like the company’s strategic initiative, Greatness Agenda, is yielding results. The initiative, which commenced in first-quarter 2014, was designed to drive transactions per store and sales.
Gross margin expanded 43 bps to 33.8% in the reported quarter. Selling, general and administrative expenses increased 7.3% to $1,459 million.
However, management is pleased with its improved merchandise margins, which in turn was a result of efficient inventory management and better promotional and permanent markdowns. Notably, the company ended fiscal 2017 with inventory down 7% year over year. Also, expenses were managed well across all business areas.
Other Financial Details
Kohl’s ended the quarter with cash and cash equivalents of $1,308 million, long-term debt of $2,797 million and shareholders’ equity of $5,426 million. Cash flow from operations amounted to $1,691 million during the fiscal.
On Feb 28, Kohl's declared an 11% hike in its quarterly cash dividend, taking it from 55 cents per share to 61 cents. The new dividend is payable on Mar 28 to shareholders of record as of Mar 14.
The company opened four new stores, while it relocated one namesake store during fiscal 2017. Also, it opened an Off/Aisle location during the same time period. Kohl’s ended fiscal 2017 with 1,158 stores across 49 states.
Guidance
Management remains impressed with its solid sales trends and better-than-expected results in fiscal 2017. For fiscal 2018, the company anticipates comps growth in the range of flat to a rise of 2%, while sales growth is expected in a band of negative 1% to positive 1%.
Further, gross margin is estimated to rise 10 bps from fiscal 2017, whereas SG&A expenses are estimated to grow in the 1-2% range. Also, management expects interest costs of $280 million and an effective tax rate between 24% and 25%. Consequently, Kohl’s envisions earnings for fiscal 2018 in the range of $4.95-$5.45 per share.
Kohl’s projects capital expenditures for fiscal 2018 to be roughly $700 million and share buybacks of $300-$400 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted by 7.5% due to these changes.
Kohl's Corporation Price and Consensus
Kohl's Corporation Price and Consensus | Kohl's Corporation Quote
VGM Scores
At this time, KSS has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, 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 equally suitable for value, growth, and momentum investors.
Outlook
KSS has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.