Kohl's has expanded sales 3.1% annually, on average, over the past three years as its stock rose 5.6% a year. But, in the past 12 months, investors have favored specialty retailers leveraged to the economic cycle. Goldman is still bullish on Kohl's due to its accelerated share repurchase program, which it believes will bolster fiscal fourth-quarter earnings per share, which will be announced on Feb. 24. It also sees upcoming brand launches, such as the recently-announced Jennifer Lopez and Marc Anthony partnerships, as catalysts for the stock. More relevant: Kohl's trades at a discount to retail peers.
The stock sells for a trailing earnings multiple of 15, a forward earnings multiple of 12, a book value multiple of 1.9 and a cash flow multiple of 9.8, all discounts to multiline retail industry averages. Kohl's 10% trailing 12-month operating margin ranks in the 90th percentile for its industry. A $61 target implies 19% upside.