On Monday, UBS reiterated its Sell rating on Kohl's (NYSE:KSS) stock, with a steady price target of $15.00. The firm's position comes as it anticipates the company's first-quarter performance to align with market expectations. According to UBS, Kohl's is likely to confirm its full-year earnings per share (EPS) guidance of $2.10 to $2.70 for fiscal year 2024.
The firm acknowledges the potential for Kohl's first-quarter sales to surpass expectations, which could pose an upside risk. Conversely, there is a downside risk if the company's first-quarter margins fall short, potentially leading to an earnings miss for the quarter. UBS views the risks around Kohl's upcoming earnings announcement as balanced, with equal potential for positive or negative outcomes.
The options market is currently pricing in a significant move of approximately ±10.4% around the earnings event, which is higher than the historical average move of 6.7%. Despite this, UBS anticipates the stock will experience less volatility than the options market suggests.
Kohl's is expected to release its first-quarter results soon, and investors are closely monitoring the retailer's performance, especially in light of the current retail environment. The company's stock price and investor sentiment may be influenced by the actual first-quarter results and any updates to the fiscal year guidance provided by Kohl's management.
InvestingPro Insights
As Kohl's (NYSE:KSS) prepares to announce its first-quarter results, the InvestingPro data presents a mixed picture that investors may find useful. With a market capitalization of $2.85 billion and a P/E ratio of 8.9, the company shows signs of traditional valuation metrics. The dividend yield stands notably high at 7.77%, reflecting the company's commitment to returning value to shareholders, a fact supported by a 14-year track record of maintained dividend payments.
Key InvestingPro Tips highlight that Kohl's has a high shareholder yield and a valuation that implies a strong free cash flow yield. These aspects suggest that investors looking for income-generating stocks might find Kohl's an attractive option. However, it's important to note that 5 analysts have revised their earnings downwards for the upcoming period, indicating potential concerns about the company's near-term performance.
With the next earnings date set for May 30, 2024, and an InvestingPro Fair Value estimate of $22.8, slightly below the current price, investors should weigh these insights carefully. Those interested in a deeper analysis can find additional tips on InvestingPro, which currently lists 6 more tips for KSS. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking more detailed insights and analytics to inform your investment decisions.
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