KOHL’S CORP (KSS): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/KSS

Headline

Field	Value
Ticker	KSS
Company	KOHL’S CORP
Current price	$18.68/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Trailing margin (depressed year)	3.9%
Multiple paid	5x mid-cycle operating income

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 6.5% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range

Reference	Value
vs own history	+0.12σ
cohort percentile (of 68 peers)	0
implied end-window share	0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	0.84x	5	justifies
Earnings	0.29x	5	justifies
Relative	0.21x	5	justifies
Growth	0.86x	5	justifies

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.7%); the inversion above states its own rate.

Per-Model Detail (n=20)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$122.89	0.15x	yes	FCF base $1.1B, growth -4% (input: historical growth), terminal g 0.5%, WACC 5.7%, 5yr projection
DCF Exit Multiple	Growth	$50.85	0.37x	yes	Exit EV/EBITDA: 4.0x / 4.4x / 6.4x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$62.31	0.30x	yes	P/E 16.26x (blended: static sector reference 22x + trailing (TTM) 8x), scenarios: 13.7x / 16.3x / 18.8x (bear / base = reference held flat / bull), EV/EBITDA 10.16x
Simple DDM	Growth	$21.65	0.86x	yes	DPS $0.50, g=6.8% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDM	Growth	$17.73	1.05x	yes	Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$26.35	0.71x	yes	BV/sh $35.93, ROE (TTM) 6.8%, ke 9.3%
Two-Stage Excess Return	Asset	$22.32	0.84x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$10.50	1.78x	yes	Rev $15.5B, growth -4% (input: historical growth; tapered), Terminal P/S: 0.1x / 0.1x / 0.2x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$83.30	0.22x	yes	EPS $2.38, growth 35% (input: historical EPS growth), PEG=0.22 (Undervalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$52.91	0.35x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.70B × (1−21%) / WACC 5.7% → EPV (no growth)
Residual Income	Asset	$21.75	0.86x	yes	BV $35.93 + 5yr PV of (ROE (TTM) 6.8% − Kₑ 9.3%) × BV; BV grows 4.4%/yr
Graham Number	Asset	$43.86	0.43x	yes	√(22.5 × EPS $2.38 × BVPS $35.93) — Graham's conservative floor
EV/EBITDA Relative	Relative	$130.79	0.14x	yes	EBITDA $1.31B × sector EV/EBITDA 14.0x
FCF Yield	Earnings	$68.71	0.27x	yes	FCF $1052.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$65.43	0.29x	yes	SBC-adj FCF $1.02B (FCF $1.05B − SBC $0.03B) capitalized at Kₑ
Ben Graham Formula	Earnings	$76.79	0.24x	yes	EPS $2.38 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$2.95	6.33x	yes	BV $35.93 × (ROIC 0.5% / WACC 5.7%)
P/Sales Sector	Relative	$276.09	0.07x	yes	Revenue $15.46B × sector P/S 2.0x
PEG Fair Value	Relative	$89.25	0.21x	yes	EPS $2.38 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$25.73	0.73x	yes	EPS $2.38 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt	$3.0b
Net debt / NOPAT (after-tax)	2.46x
Net debt / operating income (pre-tax)	1.95x
Share count CAGR (buyback)	-3.5%
Burning cash	no

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 9.8%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Kohl's is a mid-tier department store in a long decline trying to stabilize, with comparable sales still falling but at the slowest pace in over four years and proprietary-brand and digital sales finally growing.
• The whole stock is a value-versus-trap question: at roughly 6 times through-the-cycle operating income the price sits below every standard valuation method, so the market is either handing out a bargain or correctly pricing a business that keeps shrinking.
• Watch the comparable-sales trend and the short interest: with more than 40% of the float sold short and a new management team selling a turnaround, the stock can move violently on either a real inflection or a squeeze rather than on fundamentals.

Bull Case

Read Kohl's for what stage it is in: not a grower, but a deeply discounted turnaround where the bet is stabilization, not expansion. The most recent quarter was the best comparable-sales performance in more than four years, with comps down only 1.1% and net sales down 1.7%, while proprietary-brand sales rose 6% and digital sales grew 4%. For a business the market had written off, the rate of decline slowing toward flat is the inflection the bull case needs. Management framed it as knocking on the door of growth, and pointed to cleaner inventory and disciplined expense management as the operational evidence.

The value math is stark, and it is the heart of the case. At roughly 6 times its through-the-cycle operating income, the price sits below where every standard valuation family lands, asset value, earnings power, peer multiples, and even the growth-oriented methods all read the stock as cheap. That is unusual: most discounted stocks are cheap on one lens and expensive on another, but here all four agree the price is below fair on normalized economics. The company runs a mid-cycle operating margin near 9.8% on the cycle, far above the depressed 3.9% the trailing numbers show, so if execution merely returns margins toward that mid-cycle level, the earnings power underneath the price is substantially larger than the current print suggests.

The balance sheet and capital return give the turnaround time to work. Net debt sits near $2.95 billion, under two times normalized operating income, and the share count is shrinking roughly 3.5% a year. The company continues to pay a dividend, declared at $0.125 per share for the quarter, a yield near 3.5% that pays the holder to wait. A new chief executive and a new chief operating officer have taken the operational reins, and a $140 million tariff refund claim added a one-time cash benefit in the quarter. Against department-store peer Macy's and off-price names like Burlington, Kohl's trades at the deepest discount in the group, which is the bull case in one sentence: if the decline flattens, the price has nowhere to go but up from a level that already assumes it keeps falling.

Bear Case

The macro and structural pressure with the most leverage on Kohl's is the secular decline of the mid-tier department store, and no amount of expense discipline reverses a consumer who has moved to off-price, club, and online. Net sales still fell 1.7% in the quarter, and the company's own reaffirmed full-year guidance calls for net and comparable sales to land anywhere from flat to down 2%, which is a plan to shrink more slowly, not to grow. The cheapness across every valuation method is not a market error; it is the market correctly pricing a business whose revenue base erodes a little each year while the fixed costs of a large store fleet stay put. A 6-times multiple on normalized earnings is only a bargain if those earnings are durable, and the bear's point is that the denominator keeps getting smaller.

The operating-margin assumption that makes the stock look cheap is the most fragile part of the case. The mid-cycle margin near 9.8% is a memory of a healthier era; the company's own 2026 plan targets adjusted operating margins of just 2.8% to 3.4%. The whole value argument rests on margins reverting toward mid-cycle, but management is guiding to a fraction of that, which means the normalized earnings power the bull case capitalizes may simply not return. If the right normalization is closer to today's depressed margin than to the historical one, the stock is not cheap at all, and the apparent discount evaporates.

The price action itself is a warning. The recent surge was driven heavily by a short squeeze and meme-stock activity rather than by improved fundamentals, with more than 40% of the float sold short, which means the current price reflects positioning as much as it reflects business value. The real-estate bull argument, that the owned stores are worth far more than the equity, is contested: estimates range from $10 billion down to around $5 billion or below carrying value, and real estate only crystallizes value if the company sells or leases it back, which would strip the very stores that generate the sales. The sell side is skeptical, carrying a Sell-to-neutral consensus with a median target near $14.50, below today's price, and a range from $4.50 to $40 that captures how binary the outcome is. The bear case is the value-trap case: cheap on the screen, but cheap because of what is deteriorating, and a price held up partly by short covering rather than by a business that has stopped shrinking.

Valuation

The price is making a stabilization bet on normalized earnings, and the central question is whether those normalized earnings are real. At today's level the market pays roughly 6 times Kohl's through-the-cycle operating income, a multiple so low that the price sits below what even a 5% annual decline in operating profit would warrant. This uses the company's own mid-cycle margin near 9.8% on current revenue rather than the depressed 3.9% trailing margin, because retail earnings move with the cycle. The entire valuation hinges on which margin is the honest normalization, and that is the fault line between the bull and the bear.

The method families are unusually unanimous, which is itself the signal. The asset-value lens, the earnings-power lens, the peer-multiple lens, and the growth-oriented cash-flow lens all read the price as supported, sitting below where each one lands. When every family agrees a stock is cheap, the bet is not about overvaluation, it is about whether the normalized economics the methods assume actually hold. For Kohl's that means: is the mid-cycle margin recoverable, or has the business structurally reset to a lower level. If the former, the stock is genuinely cheap; if the latter, the methods are anchored to a margin that no longer exists, and the cheapness is an illusion.

Solvency gives the turnaround a runway but is not a fortress. Net debt near $2.95 billion is under two times normalized operating income, with only about $429 million of liquid assets, and interest expense is not separately broken out in the latest filings, so the coverage cushion cannot be cleanly measured. The valuation rests less on growth than on margin recovery plus the dividend and buyback paying the holder to wait. Against department-store peer Macy's and off-price names like Burlington, Kohl's sits at the deepest discount, and the analyst median target near $14.50 actually sits below today's price, an unusual case where the street is more bearish than the stock. That inversion is the whole read: the market price is buoyed partly by short positioning, while the fundamental analysts anchor to the structural decline, and the gap between them is the value-versus-trap question the entire name turns on.

Catalysts

The first-quarter fiscal 2026 report, released in late May, was the inflection signal the bull case has waited for. Comparable sales fell just 1.1%, the best quarterly performance in more than four years, on a net-sales decline of 1.7%, with proprietary-brand sales up 6%, digital sales up 4%, and a $140 million tariff refund claim in the quarter. The narrower net loss of $0.13 per share, cleaner inventory, and a 600-basis-point improvement in Kohl's-card comparable sales were the operational evidence management leaned on to argue the turnaround is taking hold. The next comparable-sales print is the catalyst that decides whether the slowing decline becomes actual stabilization.

Leadership and guidance frame the year. A new chief executive, Michael Bender, described the company as knocking on the door of growth, and a new chief operating officer joined to tighten operations, while management reaffirmed full-year guidance of net and comparable sales flat to down 2%, adjusted EPS of $1.00 to $1.60, and adjusted operating margins of 2.8% to 3.4%. The dividend was declared at $0.125 per share, a yield near 3.5%, which pays holders while the turnaround proves out or fails.

Positioning is its own catalyst here, and a volatile one. More than 40% of the float is sold short, and the recent share-price surge was driven substantially by a short squeeze and meme-stock activity rather than by improved fundamentals. The sell side remains skeptical, with a Sell-to-neutral consensus and a median price target near $14.50, below today's price, and a range from $4.50 at UBS to $40 at Baird that captures how binary the view is. With the stock caught between a real operating inflection and heavy short positioning, the next earnings reaction is likely to be outsized in either direction.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• M (Macy's, Inc.)
• FY2025 10-K: …' s ever-changing environment. We conduct our retail merchandising business under highly competitive conditions. Although Macy's, Inc. is one of the nation's largest retailers, we have numerous and varied competitors at the national and local levels and digital competitors at the global level, including department…
• FY2025 10-K: …It is difficult to successfully predict the products and services our customers will demand. As customers expect a more personalized experience, our ability to collect, use and protect relevant customer data is important to our ability to effectively meet their expectations, but is subject to the impact of…
• DDS (DILLARD’S, INC.)
• FY2025 10-K: …and Internet and mail-order retailers. Although we are a large regional department store, some of our competitors are larger than us with greater financial resources and, as a result, may be able to devote greater resources to sourcing, promoting and selling their products. Additionally, we compete in certain markets…
• FY2025 10-K: …of net sales ​ 26.7 % ​ 25.4 % 24.4 % Cash flow provided by operations (in millions) ​ $ 714.1 ​ ​ $ 883.6 ​ $ 948.4 ​ Total retail store count at end of period ​ 272 ​ ​ 273 ​ 277 ​ Retail sales per square foot ​ $ 137 ​ ​ $ 143 ​ $ 146 ​ Retail stores sales trend ​ (2) % * (5) % ** 5 % Comparable retail store sales…
• TGT (TARGET CORPORATION)
• FY2025 10-K: …and Analysis of Financial Condition for 2023, as compared to 2022, is included in Part II, Item 7, MD&A to our Annual Report on Form 10-K for the year ended February 3, 2024 . Net Sales Net Sales includes Merchandise Sales and revenues from other sources, most notably advertising revenue and credit card…
• FY2025 10-K: …of macroeconomic, competitive, and consumer behavioral factors, as well as sales mix, and transfer of sales to new stores makes further analysis of sales metrics infeasible. TD Bank Group offers credit to qualified guests through Target-branded credit cards: the Target Credit Card and the Target MasterCard Credit…
• BURL (BURLINGTON STORES, INC.)
• FY2025 10-K: …we have diversified our product offerings, we believe traffic to our stores is still driven, in part, by weather patterns. Competition and Margin Pressure. We believe that in order to remain competitive with retailers, including off-price retailers and discount stores, we must continue to offer brand-name merchandise…
• FY2025 10-K: …with other retailers, expand their merchandise offerings, expand their e-commerce capabilities, and/or add new sales channels, change their pricing strategies, or use technology more effectively than we do, including the use of artificial intelligence. More generally, consumer e-commerce spending may continue to…
• OLLI (Ollie’s Bargain Outlet Holdings, Inc.)
• FY2025 10-K: …and other improvements in their competitive positions, as well as result in the provision of a wider variety of merchandise at competitive prices by these consolidated companies, which could have a material adverse effect our business, financial condition, and results of operations. We cannot guarantee that we will…
• FY2025 10-K: …strategy, we expect a significant portion of our sales growth will be attributable to non-comparable store sales. Accordingly, comparable store sales are only one measure we use to assess the success of our growth strategy. Gross Profit and Gross Margin Gross profit is equal to our net sales less our cost of sales.…
• DG (DOLLAR GENERAL CORP)
• FY2025 10-K: …service offerings, product sourcing and supply chain capacity, in-stock consistency, customer service, ease of shopping experience (including but not limited to various modes of shopping, including online alternatives and delivery), promotional activity, employees, and market share. We compete with discount stores…
• FY2025 10-K: …operate stores in many of the areas where we operate, and many of them engage in extensive advertising and marketing efforts. Our direct competitors include Family Dollar, Dollar Tree, and various local, independent operators, as well as Walmart, Target, Kroger, Aldi, Costco, Sams Club, BJ's Wholesale Club,…
• DLTR (DOLLAR TREE, INC.)
• FY2025 10-K: …operations and financial condition of our continuing operations. Overview We are a leading operator of more than 8,800 retail discount stores, as of February 1, 2025, offering merchandise predominantly at the opening price point of $1.25, with additional offerings at higher price points. Our net sales are derived…
• FY2025 10-K: …our prices, but our ability to do so may be limited with the result that we could see lower sales or reduced profitability. We expect competition to increase in the future. There are no significant economic barriers for others to enter our retail sector. We compete with discount stores and many other retailers,…
• FIVE (Five Below, Inc.)
• FY2025 10-K: …factors effectively may affect our ability to timely build or lease new facilities, which could have a material adverse effect on our future growth and profitability. 25 We operate in a competitive environment and, as a result, we may not be able to compete effectively or maintain or increase our sales, market shares…
• FY2025 10-K: …experience and product offerings. Our competitors may seek to copy our business strategy and in-store experience, which could result in a reduction of any competitive advantage or special appeal that we might possess. In addition, most of our products are sold to us on a non-exclusive basis. As a result, our current…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Kohl's Q1 2026 results, May 2026 · Kohl's Q1 2026 results and short-interest data, 2026 · Kohl's Q1 2026 earnings call, May 2026 · Kohl's Q1 2026 dividend, May 2026 · Kohl's 2026 guidance, May 2026 · Kohl's short-interest data, 2026 · MarketBeat and analyst consensus, 2026