NEW YORK (TheStreet) -- Kohl's
(KSS - Get Report) shares are up 3.3% to $56.92 on Thursday after the company reporting second quarter net income of $232 million, or $1.13 per diluted share, that was ahead of analysts expectations by 6 cents.
The company increased its profit, despite reporting a 1.1% drop in net sales and a 1.3% drop in comparable same store sales, as it was able to cut operating costs in its selling, general and administrative divisions by 2% during the period.
The retailer reported strong comparable store sales in July that partially offset sluggish results in the previous two months.
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TheStreet Ratings team rates KOHL'S CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate KOHL'S CORP (KSS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 36.76% is the gross profit margin for KOHL'S CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 3.07% is above that of the industry average.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The debt-to-equity ratio is somewhat low, currently at 0.82, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.27 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.7%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: KSS Ratings Report