Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.68, 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 0.23 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Multiline Retail industry and the overall market on the basis of return on equity, KOHL'S CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- 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.
- KOHL'S CORP's earnings per share declined by 7.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KOHL'S CORP increased its bottom line by earning $4.38 versus $3.69 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus $4.38).
- 39.10% is the gross profit margin for KOHL'S CORP which we consider to be strong. Regardless of KSS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KSS's net profit margin of 5.70% compares favorably to the industry average.
Kohl's Corporation operates department stores in the United States. Its stores offer private, exclusive, and national branded apparel, footwear, and accessories for women, men, and children; soft home products, such as sheets and pillows; and housewares targeted to middle-income customers. The company has a P/E ratio of 12.4, above the average retail industry P/E ratio of 12.2 and below the S&P 500 P/E ratio of 17.7. Kohl's has a market cap of $12.48 billion and is part of the
industry. Shares are up 4.8% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.