Analysts on the sidelines
Analysts remain on the sidelines for Kohl’s (KSS) despite strong results for the fiscal second quarter of 2018. Of the 21 analysts covering Kohl’s (KSS) stock as of August 21, 52% recommend a “hold.” Another 38% recommended a “buy,” and the remaining 10% have recommended a “sell.”
For the fiscal second quarter, Kohl’s net sales of $4.31 billion and adjusted EPS (earnings per share) of $1.76 easily beat the consensus estimate of $4.26 billion and $1.64, respectively. On a YoY (year-over-year) basis, net sales rose 3.9%. The adjusted EPS jumped 41.9% driven by higher revenue and operating income.
The stock has seen three target price revisions since its results on August 21. We expect a few more in the coming days. On August 21, RBC upped the price target on the stock to $82.00 from $69.00 earlier. Credit Suisse increased the price target to $78.00 from $74.00, while JPMorgan raised it to $89.00 from $84.00. Analysts’ 12-month average target price for KSS stock is $79.53, which reflects a 0.8% downside based on its August 21 price.
Analysts on the sidelines for peers as well
Of the 18 analysts covering Macy’s (M), 67% recommend a “hold,” and another 22% recommend a “buy.” Their target price of $36.23 reflects a 5.3% downside based on the stock’s August 21 price.
Of the 16 analysts covering JCPenney (JCP), 75.0% recommend a “hold,” and the remaining 25% recommended a “sell.” Their mean target price is $1.58, which indicates a 9.2% downside.
For Nordstrom (JWN) stock, of the 24 analysts, 71% recommend a “hold.” Another 21% of the analysts recommended a “buy.” JWN’s mean target price is $57.63, which indicates a 6.1% downside.
Changes in PE valuation
On August 21, 2018, Kohl’s was trading at a 12-month forward PE (price-to-earnings) ratio of 14.4x. Following the announcement of second-quarter results, the PE valuation has increased 0.9%.
In contrast, Macy’s is trading at a 12-month forward PE ratio of ~10.1x. However, JCPenney and Nordstrom are trading at 12-month forward PE ratios of 26.1x and 16.6x, respectively.