Kohl’s (KSS:NYS) Fundamental Valuation Report


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Kohl’s $74.00 (USD) Close Price as of 15/06/2018

Based on the analysis conducted in this report, Kohl’s, (KSS:NYS) is found to be  Overvalued.

Company Kohl’s
Symbol:Exchange KSS:NYS
Industry Consumer Cyclical:Department Stores
Close Price/Date $74.00 (USD) 15/06/2018
Weighted Average Valuation $67.69 (USD)
Summary KSS:NYS is found to be  Overvalued by 8.5% using the 3 valuation models shown below.
Valuation Models Used Analyst Consensus: $72.25 (USD)
(in order of importance) Comparables: $67.19 (USD)
Adjusted Book Value: $55.04 (USD)
Valuation Methods Analysis This company is:
Cash Flow Basis: Undervalued on a Cash Flow Valuation basis
Comparable Company Basis: Overvalued on a Comparable Valuation basis
Asset Basis: Overvalued on an Asset Valuation basis

Valuation Details

Kohl’s Valuations

Summary chart

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for KSS:NYS

Using a discounted cash flow model we generated an intrinsic value of $91.86 (USD) for KSS:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

KSS:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $91.86 1% 5% 1% 5%
WACC (or Ke) 9.35 $114.63 $75.31
Terminal Growth Rate 3.00 $77.08 $112.16
Tax Rate 0.23 $100.65 $83.07
Cash Flow 2,506,608,000 $83.52 $100.20
Capital Expenditures
Long Term Debt 4,629,000,000 $93.24 $90.47

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $67.19 (USD) for KSS:NYS. We also generated a valuation of $75.72 (USD) using other metrics and comparables.
The comparable companies were Nordstrom (JWN:NYS) and Macy’s (M:NYS).

Company KSS:NYS End Date Value
Earnings/Share $5.18 (USD)
Book Value/Share $32.05 (USD)
Sales/Share $115.20 (USD)
Cash Flow/Share $12.17 (USD)
EBITDA/Share $14.41 (USD)
Price Based on Comps Adjustment Factor (%)
$66.85 (USD) -26.8
$158.87 (USD) -28.2
$58.45 (USD) 26.6
$75.78 (USD) -38.5
$59.10 (USD) -11.5
KSS:NYS Ratios Used Average Values JWN:NYS M:NYS
14.29 PE Ratio 12.91 18.49 7.32
2.31 PB Ratio 4.96 7.90 2.01
0.64 PS Ratio 0.51 0.54 0.47
6.08 PCF Ratio 6.23 6.66 5.80
6.48 EV to EBITDA 6.03 6.36 5.69

Multiples

Using a multiples approach we generated a valuation of  $65.42 (USD) for KSS:NYS

Company KSS:NYS End Date Value
Earnings/Share $5.18 (USD)
Book Value/Share $32.05 (USD)
Sales/Share $115.20 (USD)
Cash Flow/Share $12.17 (USD)
EBITDA/Share $14.41 (USD)
Price Based on Comps Adjustment Factor
$69.02 (USD) 0
$54.38 (USD) 0
$56.61 (USD) 0
$68.57 (USD) 0
$78.54 (USD) 0
Ratios Ratio Average
PE Ratio 13.33
PB Ratio 1.70
PS Ratio 0.49
PCF Ratio 5.64
EV to EBITDA 5.45

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  KSS:NYS for the last 10 years was  1.73

We ran the Adjusted Book Value for  KSS:NYS and generated a book value of  $31.88 (USD)
By multiplying these we get an adjusted valuation of  $55.04 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for KSS:NYS. The 4 analysts have a concensus valuation for KSS:NYS for 2019 of $72.25 (USD).

KSS:NYS Kohl’s

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 5 1 3.0000 Hold 2018-6-14

Current Price: not available

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 5.25 5.57 6.19
# EPS Analysts 6 5 1
Mean Revenue 19,415.60 19,676.10 20,304.90
# Revenue Analysts 3 3 1
Mean Target Price 72.25
Mean Cash Flow 11.91 12.21 13.02
Mean EBITDA 2,367.30 2,389.20 2,433.60
Mean Net Income 828.00 831.80 926.50
Mean Debt Outstanding 2,958.80 2,678.00 2,344.50
Mean Tax Rate 28.00 28.00
Mean Growth Rate 5.17
Mean Capital Expenditure 693.60 871.50 671.80

Company Overview (KSS:NYS USD)

Price 74.00
Range 72.25 – 74.21
52 week 35.56 – 78.32
Open 72.94
Vol / Avg. 4.31M/2.82M
Mkt cap 12.43B
P/E 14.29
Div/yield 2.44/0.03
EPS 5.12
Shares 168M
Beta 0.92

Summary chart

Detailed Company Description

Kohl’s Corp is an American broadlines retailer. It operates department stores that sell moderately priced exclusive and national brand apparel, footwear, accessories, beauty and home products. The company also has an e-commerce platform.

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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