It’s been a tough third quarter for retailers, who have all felt the effects of slowing consumer spending. We’ve seen similar sentiments in earnings from Target, Walmart, and now today, Kohl’s (KSS).

The company reported earnings that exceeded analyst expectations, and yet, dwindling sales have sent the stock more than 9% lower in Tuesday morning’s trading session.

Kohl’s was expecting a modest 3.8% loss, but net sales fell 5.5% from this time last year to just $3.84 billion. This also fell short of the forecasted $3.99 billion analysts were looking for. Executives say they are in the early stages of repositioning the company for better sales, but that the turnaround will take time.

The positive takeaway from the third quarter was a solid earnings per share of 53 cents compared to the 35 cents FactSet consensus. That being said, this was also a steep drop from last year when Kohl’s reported EPS of 82 cents.

Looking ahead to the final and most important quarter for 2023, Kohl’s is fine-tuning its expectations to lift the low end of the projection. The full-year earnings guidance has been narrowed from $2.10-$2.70 to a more optimistic $2.30 to $2.70. 

Again, though, net sales may suffer – as the company was initially expecting a low-end loss of 2% but is now forecasting up to 2.8% decline in net sales.

Consumers have slowed their spending on all but the essentials going into the holiday season, with increased spending on experiences rather than goods. This doesn’t bode well for a company like Kohl’s, but, experts believe the worst is behind them and the company is posed to turn things back in the right direction.

That being said, KSS has now fallen more than 17% in the past few months and sits 26% lower in the past year. Will it continue to fall, or is it poised to rebound? 

Whether you’re a current investor or are considering trading this stock, we’ve got something you need to see. Here’s what we discovered through the VectorVest stock forecasting software.

KSS May Have Poor Safety, But Its Upside Potential and Timing are Fair

VectorVest transforms the way you uncover and analyze opportunities for the better, empowering you to win more trades with less work. You’re given clear, actionable insights in just 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).

Each rating sits on the same scale of 0.00-2.00 with 1.00 being the average, allowing for quick and easy interpretation. You’re then given a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s what we found for KSS:

  • Fair Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection) to AAA corporate bond rates and risk, offering far better insights than a simple comparison of price to value alone. As for KSS, the RV rating of 0.99 is just below the average but deemed fair nonetheless. The stock is fully valued right now.
  • Poor Safety: The RS rating is an indicator of risk, derived from a deep analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. KSS has a poor RS rating of 0.75 right now.
  • Fair Timing: Despite the lackluster performance in the past few weeks and months, KSS has a fair RT rating of 1.03 - just above the average. The rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.

The overall VST rating of 0.93 is a bit below the average but still considered fair. This VST rating is accompanied by a HOLD recommendation for KSS right now. Learn more about the current opportunity with this stock and/or how the VectorVest system works with a free stock analysis today!

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VectorVest advocates buying safe, undervalued stocks, rising in price. Despite a solid EPS, dwindling sales sent shares of KSS 9% lower in Tuesday’s trading session. The stock has fair upside potential and timing but poor safety right now.

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