Kohl's Hopes Appear Dashed
Vince Martin | Jul 07, 2022 09:40AM ET
This article was written exclusively for Investing.com
It seems incredibly easy to make the case for Kohl's Corporation (NYSE:KSS) stock at the moment. Relative to trailing twelve-month results, shares of the U.S. department store operator trade at just 4.3x earnings with a dividend yield of 7.3%.
And less than four months ago, the Menomonee Falls, Wisconsin based retailer was the subject of a bidding war. That was even after the company ended the bidding process. And retailers of all stripes have plunged from where they traded at the beginning of the year. TGT stock is down 37%. Macy's (NYSE:M) has lost almost one-third of its value. The market has rapidly adjusted to the 'new normal' for retail—which, unfortunately, may look a lot like the old normal.
And that gets to the core problem here. Before the pandemic, KSS stock went nowhere. During the 2010s, shares lost 5.6% of their value. The S&P 500 rallied 190%.
During that period, over and over investors believed that stocks like KSS were simply “too cheap.” With few exceptions, they were proven wrong. Maybe this time is different for Kohl's; maybe a sub-5x multiple to estimated earnings for this year indeed is too cheap.
But we've heard that story before. Given the pressures on the industry, and the end of the bidding process, as well as a stock market which is significantly lower, investors can probably do better elsewhere.
Disclaimer: As of this writing, Vince Martin has no positions in any securities mentioned.
***
Looking to get up to speed on your next idea? With InvestingPro+, you can find:
- Any company’s financials for the last 10 years
- Financial health scores for profitability, growth, and more
- A fair value calculated from dozens of financial models
- Quick comparison to the company’s peers
- Fundamental and performance charts
And a lot more. Get all the key data fast, so you can make an informed decision, with InvestingPro+. Learn More »
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.