Is Kohl’s (KSS) a good value stock right now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we continually monitor the latest trends in value, growth and momentum to find strong companies for our readers.

Given these trends, value investing is clearly one of the most popular methods for finding strong stocks in any type of market. Value investors use a variety of methods, including tried-and-tested valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific characteristics. For example, value investors will be interested in stocks with excellent grades in the Value category. When combined with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

One company that might catch the eye of value investors is Kohl’s (KSS). KSS currently has a Zacks Rank of #1 (Strong Buy) and an A grade for Value.

Another important valuation metric for KSS is its P/B ratio of 1.72. The P/B ratio compares a stock’s market value to its book value, which is defined as total assets minus total liabilities. This company’s current P/B ratio looks solid compared to the industry average of 2.99. Over the past 52 weeks, KSS’s P/B ratio has ranged from 1.96 to 0.60, with a median of 1.53.

Value investors also appreciate the P/S ratio, which is calculated by dividing the stock price by the company’s revenue. This is a preferred metric because revenue can’t really be manipulated, so sales are often a more reliable indicator of performance. KSS has a P/S ratio of 0.49. In comparison, the industry’s average P/S ratio is 0.62.

Finally, investors should note that KSS has a P/CF ratio of 5.61. This number shows a company’s operating cash flow and can be used to find companies that are undervalued when considering their impressive cash outlook. This company’s current P/CF looks solid compared to its industry’s average P/CF of 11.85. Over the past 12 months, KSS’s P/CF has ranged from 13.82 to 3.57, with a median of 6.98.

Value investors will likely look at more than just these metrics, but the data above shows that Kohl’s is likely undervalued right now. And when you consider the strength of its earnings outlook, KSS stands out as one of the strongest value stocks on the market.

Want the latest recommendations from Zacks Investment Research? Download the 7 best stocks for the next 30 days today. Click here to get this free report

Kohls Corporation (KSS): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research