Yahoo Finance At US$46.88, Is It Time To Put Kohl's Corporation (NYSE:KSS) On Your Watch List?
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Kohl's Corporation (NYSE:KSS), which is in the multiline retail business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $75.48 at one point, and dropping to the lows of $46.88. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Kohl's's current trading price of $46.88 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Kohl's’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Kohl's
What's the opportunity in Kohl's?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Kohl's’s ratio of 9.7x is trading slightly below its industry peers’ ratio of 10.15x, which means if you buy Kohl's today, you’d be paying a reasonable price for it. And if you believe Kohl's should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Kohl's’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Kohl's generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Kohl's, it is expected to deliver a relatively unexciting earnings growth of 3.2%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Kohl's, at least in the near term.
What this means for you:
Are you a shareholder? KSS’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at KSS? Will you have enough conviction to buy should the price fluctuate below the true value?
Are you a potential investor? If you’ve been keeping tabs on KSS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Kohl's. You can find everything you need to know about Kohl's in the latest infographic research report. If you are no longer interested in Kohl's, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
