Is Kohl's (KSS) Too Good to Be True? A Comprehensive Analysis of a Potential Value Trap

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Is Kohl's (KSS) Too Good to Be True? A Comprehensive Analysis of a Potential Value Trap

GuruFocus.com2023-10-06

Value-focused investors are always on the hunt for stocks that are priced below their intrinsic value. One such stock that merits attention is Kohl's Corp (NYSE:KSS). The stock, currently priced at $...

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The stock, currently priced at $...</p>\n\n<a href=\"https://finance.yahoo.com/news/kohls-kss-too-good-true-154534956.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Kohl's (KSS) Too Good to Be True? 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A Comprehensive Analysis of a Potential Value Trap\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-10-06 23:45 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/kohls-kss-too-good-true-154534956.html><strong>GuruFocus.com</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Value-focused investors are always on the hunt for stocks that are priced below their intrinsic value. One such stock that merits attention is Kohl's Corp (NYSE:KSS). The stock, currently priced at $...</p>\n\n<a href=\"https://finance.yahoo.com/news/kohls-kss-too-good-true-154534956.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4220","symbol_name":"综合零售","start_time":0,"source_url":"https://finance.yahoo.com/news/kohls-kss-too-good-true-154534956.html","article_id":"2373100328","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/u2XPLK_UUmA81uClE8OW6A--~B/aD00MDA7dz00MDA7YXBwaWQ9eXRhY2h5b24-/https://media.zenfs.com/en/us.finance.gurufocus/2fc5eeac072e6cbc08c53e9cd3415523"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2373100328","pubTimestamp":1696607134,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Value-focused investors are always on the hunt for stocks that are priced below their intrinsic value. One such stock that merits attention is Kohl's Corp . The stock, currently priced at $17.91, recorded a loss of 4.05% in a day and a 3-month decrease of 22.93%. According to the GF Value, the stock's fair valuation is $49.4.GuruFocus has detected 3 Warning Signs with KSS. Click here to check it out.Despite its seemingly attractive valuation, certain risk factors associated with Kohl's  should not be ignored. These risks are primarily reflected through its low Altman Z-score of 1.65. These indicators suggest that Kohl's, despite its apparent undervaluation, might be a potential value trap. This complexity underlines the importance of thorough due diligence in investment decision-making.The EBIT to Total Assets ratio serves as a crucial barometer of a company's operational effectiveness, correlating earnings before interest and taxes  to total assets. An analysis of Kohl's's EBIT to Tot","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4220":"综合零售","KSS":"柯尔百货","BK4585":"ETF&股票定投概念","BK4103":"百货商店","BK4588":"碎股"},"translate_title":"美国柯尔百货公司（KSS）好得令人难以置信吗？一个潜在价值陷阱的综合分析","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"KSS":1},"content_text":"Value-focused investors are always on the hunt for stocks that are priced below their intrinsic value. One such stock that merits attention is Kohl's Corp (NYSE:KSS). The stock, currently priced at $17.91, recorded a loss of 4.05% in a day and a 3-month decrease of 22.93%. According to the GF Value, the stock's fair valuation is $49.4.\nUnderstanding the GF Value\n\nWarning! GuruFocus has detected 3 Warning Signs with KSS. Click here to check it out. \nKSS 30-Year Financial Data\nThe intrinsic value of KSS\n\nThe GF Value represents the current intrinsic value of a stock derived from GuruFocus's exclusive method. It gives an overview of the fair value that the stock should be traded at, calculated based on historical multiples, GuruFocus adjustment factor, and future estimates of the business performance. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher.\n\nConsidering the Risks\nDespite its seemingly attractive valuation, certain risk factors associated with Kohl's (NYSE:KSS) should not be ignored. These risks are primarily reflected through its low Altman Z-score of 1.65. These indicators suggest that Kohl's, despite its apparent undervaluation, might be a potential value trap. This complexity underlines the importance of thorough due diligence in investment decision-making.\nUnderstanding the Altman Z-Score\nThe Altman Z-score is a financial model that predicts the probability of a company entering bankruptcy within a two-year time frame. It combines five different financial ratios, each weighted to create a final score. A score below 1.8 suggests a high likelihood of financial distress, while a score above 3 indicates a low risk.\nCompany Snapshot\nKohl's operates about 1,170 department stores in 49 states that sell moderately priced private-label and national brand clothing, shoes, accessories, cosmetics, and home furnishings. Most of these stores are in strip centers. Kohl's also operates a large digital sales business. Women's apparel is Kohl's largest category, having generated 27% of its 2022 sales.\n\nBreaking Down Kohl's Low Altman Z-Score\nA dissection of Kohl's's Altman Z-score reveals that the company's financial health may be weak, suggesting possible financial distress:\nThe Retained Earnings to Total Assets ratio provides insights into a company's capability to reinvest its profits or manage debt. Evaluating Kohl's's historical data, 2021: 0.89; 2022: 0.91; 2023: 0.19, we observe a declining trend in this ratio. This downward movement indicates Kohl's's diminishing ability to reinvest in its business or effectively manage its debt, negatively impacting its Z-Score.\nThe EBIT to Total Assets ratio serves as a crucial barometer of a company's operational effectiveness, correlating earnings before interest and taxes (EBIT) to total assets. An analysis of Kohl's's EBIT to Total Assets ratio from historical data (2021: 0.06; 2022: 0.08; 2023: 0.01) indicates a recent dip following an initial rise. This reduction suggests that Kohl's might not be utilizing its assets to their full potential to generate operational profits, which could be negatively affecting the company's overall Z-score.\nA vital indicator for Kohl's is its asset turnover. The data: 2021: 1.21; 2022: 1.22; 2023: 1.17 from the past three years suggests a recent decline following an initial increase in this ratio. The asset turnover ratio reflects how effectively a company is using its assets to generate sales. Therefore, a drop in this ratio can signify reduced operational efficiency, potentially due to underutilization of assets or decreased market demand for the company's products or services. This shift in Kohl's's asset turnover underlines the need for the company to reassess its operational strategies to optimize asset usage and boost sales.\nConclusion\nGiven the analysis above, Kohl's (NYSE:KSS) appears to be a potential value trap. Despite its seemingly attractive valuation, the company's low Altman Z-score and other financial indicators suggest potential financial distress. Therefore, investors should exercise caution and conduct thorough due diligence before making an investment decision.\nGuruFocus Premium members can find stocks with high Altman Z-Score using the following Screener: Walter Schloss Screen .\nThis article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.This article first appeared on \nGuruFocus.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}