Tuesday, Citi reaffirmed its neutral rating on Kohl's shares (NYSE:KSS) with a steady price target of $24.00. The firm anticipates that Kohl's earnings per share (EPS) will align with consensus estimates, but sales may fall short. Citi's forecast for the first quarter EPS stands at $0.04, slightly below the consensus of $0.05, with comparable store sales (comps) expected to decline by 2.0%, contrary to the consensus of a 0.1% decrease and the company's guidance of 0% to +2% for the fiscal year 2024.
The expectation is that Kohl's management will maintain its annual comp guidance of 0% to +2%, which is in line with consensus projections of a 1% increase. Additionally, EPS guidance is projected to remain unchanged at $2.10 to $2.70, compared to a consensus estimate of $2.38. This outlook is based on the company's core retail business performance.
Kohl's management had previously indicated that the first quarter would likely be the weakest in terms of sales. Nonetheless, they might express optimism about upcoming business initiatives during their guidance reiteration. While maintaining the guidance, there is a possibility that management could adjust their outlook, considering the delay in the Consumer Financial Protection Bureau's (CFPB) implementation of late fee caps. Kohl's had initially expected the late fee impact to affect results starting August 1.
The postponement of the CFPB late fee cap led to an 8% increase in Kohl's stock price on the day of the announcement. This suggests that the market has already factored in some expectations for improved near-term credit results. The delay in regulation may offer some respite for the retailer, potentially influencing its financial guidance.
InvestingPro Insights
As Citi maintains its neutral stance on Kohl's (NYSE:KSS), the InvestingPro platform offers a nuanced view of the company's financial health and future prospects. The InvestingPro Tips highlight a high shareholder yield and a valuation that implies a strong free cash flow yield, which are key considerations for investors looking for returns. Furthermore, Kohl's has a track record of maintaining dividend payments for 14 consecutive years, a sign of its commitment to returning value to shareholders.
From the InvestingPro Data, we observe that Kohl's has a market capitalization of $2.9 billion and a price-to-earnings (P/E) ratio of 9.09, reflecting the market's valuation of the company's profitability. Additionally, the company's revenue for the last twelve months as of Q4 2024 stands at $17.48 billion, with a gross profit margin of nearly 40%, indicating its ability to maintain profitability despite revenue contraction. Moreover, the dividend yield as of the most recent data point is an attractive 7.65%, which could be appealing for income-focused investors.
Investors considering Kohl's as an investment opportunity may find additional insights by exploring more InvestingPro Tips. There are 9 tips available that provide a deeper analysis of Kohl's financial performance and market expectations. To further assist our readers, we offer a special promotion: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable insights.
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