Warren Buffet Stock Analysis
Kohl’s Corporation (KSS)
Warren Buffet has built a career on investing in companies for the long-term benefit of his portfolio. In order to determine if a certain company is worth the investment, Warren Buffett examines four areas of a potential company. He wants to find a business that is easy to understand, has favorable long-term prospects, operated by honest and competent people, and is available at an attractive price below the intrinsic value. All of these areas are assessed and must be met in order to be considered a good investment by Mr. Warren Buffet. Therefore, these areas will be analyzed and considered when evaluating Kohl’s Corporation as a potential company to invest in.
A Business We Can Understand …show more content…
economy and declining consumer spending because the company has no stores outside of the U.S. and does not have an international presence to serve as a buffer to fluctuations in the US economy. However, Kohl's discounted pricing allows it to ride out tough economic times better than its competitors in Macy’s, J.C. Penny or Sears.
Kohl’s has been showing growth since 2005 and has reported a sales growth rate of approximately 1.1% over the last 10 years, with sales per share growing at nearly 10.2% and earning per share growing at 4.8%. Dividends have reported a growth rate of 16% and a free cash flow growth rate of 9.8%. The company has a beta of 0.85, which is below the market beta of 1.00, indicating a low market risk company.
Kohl’s is a fairly easy company to understand. The company exercises control in the large-scale retail industry and maintains a dominant hold in the low-cost bracket of department stores. It competes primarily in the clothing segment of retail and has managed to bounce back from the economic recession of 2008. Kohl’s continues to adapt to its customer base and is looking to expand into other private-brand merchandise, while maintaining sales and dividend growth in future …show more content…
The core category, 30% of company sales, comes particularly from its Missy business (Kohl’s Corporate). The improvement of sales is primarily from the company’s dominant position in active wear and wellness apparel. The company plans on reinventing its weak women’s business with expansion into other brands, both private and exclusive, and implementing more effective marketing strategies throughout the company. The company remains focused on national brands and expanding into more private-label business. Kohl’s has shown better sales gains in their private and exclusive brands than their competitors in the industry. It appears that the differing sales mix will add about 200 basis points annually to national brands through 2017 (Kohl’s Corporate). Areas of focus for the company include entertainment brands and local licensed sports products. New projects Kohl’s is looking to capitalize on include expanding Nike, Champion, Puma, and Gaiam (yoga-based) products, and Bliss in the beauty field.
Kohl's has a lower cost structure compared to its direct competitors, giving it an important edge, but it doesn't have the kind of durable competitive advantage that a company like Wal-Mart or Macy’s enjoys in the retail industry due to their never-ending reach. Some promising segments include improving the beauty
Kohl’s Corporation (KSS)
Warren Buffet has built a career on investing in companies for the long-term benefit of his portfolio. In order to determine if a certain company is worth the investment, Warren Buffett examines four areas of a potential company. He wants to find a business that is easy to understand, has favorable long-term prospects, operated by honest and competent people, and is available at an attractive price below the intrinsic value. All of these areas are assessed and must be met in order to be considered a good investment by Mr. Warren Buffet. Therefore, these areas will be analyzed and considered when evaluating Kohl’s Corporation as a potential company to invest in.
A Business We Can Understand …show more content…
economy and declining consumer spending because the company has no stores outside of the U.S. and does not have an international presence to serve as a buffer to fluctuations in the US economy. However, Kohl's discounted pricing allows it to ride out tough economic times better than its competitors in Macy’s, J.C. Penny or Sears.
Kohl’s has been showing growth since 2005 and has reported a sales growth rate of approximately 1.1% over the last 10 years, with sales per share growing at nearly 10.2% and earning per share growing at 4.8%. Dividends have reported a growth rate of 16% and a free cash flow growth rate of 9.8%. The company has a beta of 0.85, which is below the market beta of 1.00, indicating a low market risk company.
Kohl’s is a fairly easy company to understand. The company exercises control in the large-scale retail industry and maintains a dominant hold in the low-cost bracket of department stores. It competes primarily in the clothing segment of retail and has managed to bounce back from the economic recession of 2008. Kohl’s continues to adapt to its customer base and is looking to expand into other private-brand merchandise, while maintaining sales and dividend growth in future …show more content…
The core category, 30% of company sales, comes particularly from its Missy business (Kohl’s Corporate). The improvement of sales is primarily from the company’s dominant position in active wear and wellness apparel. The company plans on reinventing its weak women’s business with expansion into other brands, both private and exclusive, and implementing more effective marketing strategies throughout the company. The company remains focused on national brands and expanding into more private-label business. Kohl’s has shown better sales gains in their private and exclusive brands than their competitors in the industry. It appears that the differing sales mix will add about 200 basis points annually to national brands through 2017 (Kohl’s Corporate). Areas of focus for the company include entertainment brands and local licensed sports products. New projects Kohl’s is looking to capitalize on include expanding Nike, Champion, Puma, and Gaiam (yoga-based) products, and Bliss in the beauty field.
Kohl's has a lower cost structure compared to its direct competitors, giving it an important edge, but it doesn't have the kind of durable competitive advantage that a company like Wal-Mart or Macy’s enjoys in the retail industry due to their never-ending reach. Some promising segments include improving the beauty