Analyzing Sears Holdings Corporation (SHLD) & Kohl’s Corporation (KSS)

Sears Holdings Corporation (NASDAQ: SHLD) and Kohl’s Corporation (NYSE:KSS) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitabiliy, valuation and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Sears Holdings Corporation and Kohl’s Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sears Holdings Corporation 1 0 0 0 1.00
Kohl’s Corporation 4 11 5 0 2.05

Sears Holdings Corporation currently has a consensus price target of $4.00, indicating a potential downside of 40.03%. Kohl’s Corporation has a consensus price target of $43.22, indicating a potential upside of 15.63%. Given Kohl’s Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Kohl’s Corporation is more favorable than Sears Holdings Corporation.

Volatility and Risk

Sears Holdings Corporation has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500. Comparatively, Kohl’s Corporation has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.

Dividends

Kohl’s Corporation pays an annual dividend of $2.20 per share and has a dividend yield of 5.9%. Sears Holdings Corporation does not pay a dividend. Kohl’s Corporation pays out 64.1% of its earnings in the form of a dividend. Kohl’s Corporation has increased its dividend for 6 consecutive years.

Profitability

This table compares Sears Holdings Corporation and Kohl’s Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sears Holdings Corporation -7.16% N/A -9.19%
Kohl’s Corporation 3.25% 13.29% 5.02%

Institutional and Insider Ownership

66.1% of Sears Holdings Corporation shares are owned by institutional investors. 89.0% of Sears Holdings Corporation shares are owned by company insiders. Comparatively, 1.2% of Kohl’s Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Sears Holdings Corporation and Kohl’s Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sears Holdings Corporation $21.05 billion 0.03 -$1.07 billion ($14.08) -0.47
Kohl’s Corporation $18.56 billion 0.34 $2.33 billion $3.43 10.90

Kohl’s Corporation has higher revenue, but lower earnings than Sears Holdings Corporation. Sears Holdings Corporation is trading at a lower price-to-earnings ratio than Kohl’s Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Kohl’s Corporation beats Sears Holdings Corporation on 11 of the 16 factors compared between the two stocks.

Sears Holdings Corporation Company Profile

Sears Holdings Corporation is an integrated retailer. The Company is the parent company of Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. (Sears). The Company’s segments are Kmart and Sears Domestic. It also offers Shop Your Way, a member-based social shopping platform that offers rewards and personalized services. The Company is the home appliance retailer, as well as offers tools, lawn and garden, fitness equipment, automotive repair and maintenance. Its brands include Kenmore, Craftsman and DieHard. It also maintains a range of apparel and home offering, including labels, such as Jaclyn Smith, Joe Boxer, Route 66, Cannon, Ty Pennington Style and Levi’s and also offers Lands’ End merchandise in some of its Full-line stores. As of January 28, 2017, it is also a provider of home services, with over four million service and installation calls made annually. As of January 28, 2017, it operated a network of stores with 1,430 full-line and specialty retail stores.

Kohl’s Corporation Company Profile

Kohl’s Corporation (Kohl’s) is an operator of department stores. The Company operates approximately 1,154 Kohl’s department stores, a Website (www.Kohls.com), approximately 12 FILA outlets, and approximately three Off-Aisle clearance centers. The Company’s stores and Website sell moderately-priced private label and national brand apparel, footwear, accessories, beauty and home products. The Company’s Website includes merchandise that is available in its stores, as well as merchandise that is available only online. The Company’s merchandise mix includes both national brands and private brands that are available only at Kohl’s. The Company’s private brands include Apt. 9, Croft & Barrow, Jumping Beans, SO and Sonoma Goods for Life. The Company’s exclusive brands include Food Network, Jennifer Lopez, Marc Anthony, Rock & Republic and Simply Vera Vera Wang.

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