Kohl's Corp Stock Hold Recommendation Reiterated (KSS)

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 ( TheStreet) -- Kohl's (NYSE: KSS) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and disappointing return on equity.

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Highlights from the ratings report include:
  • KOHL'S CORP has improved earnings per share by 13.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. 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 ($4.40 versus $4.38).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.75, 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 0.15 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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.
  • Net operating cash flow has decreased to $121.00 million or 44.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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. Kohl's has a market cap of $9.62 billion and is part of the services sector and retail industry. The company has a P/E ratio of 9.8, below the S&P 500 P/E ratio of 17.7. Shares are down 2.7% year to date as of the close of trading on Wednesday.

You can view the full Kohl's Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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