- While most firms are positive on Kohl's (NYSE:KSS) following results released last night, Deutsche Bank's William Dreher Jr. provides some different sort of comments.
Q3 EPS of $0.68 was $0.04 above Street's $0.65 estimate, $0.09 above the high-end of the $0.56-$0.59 plan, but $0.01 below DB $0.69 estimate. The $0.68 EPS result represents a strong +52.2% increase over $0.45 LY, but investors may have been seeking more, with whisper numbers looking for a 7-handle EPS. Reiteration of Q4 guidance versus JCP's $0.10 increase, the lack of share repurchases and likely fewer than the 115 planned FY07 store openings could pressure the shares, despite the very strong y/y EPS growth. Though they believe that KSS operations are hitting on all cylinders and sales comparisons are modest through the spring, they believe that this is already priced into the shares. Maintains HOLD rating.
The rate of share repurchases during the quarter slowed dramatically, with only about 1MM shares repurchased (at an average price of $66.54/share) versus 18.4MM share repurchases (at an average price of $55.74/share) in Q2:06. This implies that management may feel that the shares are a bit rich at today's levels, but also reflects a strong discipline in managing its cash. DB believes that this discipline should enable KSS to help support the stock should the shares trade down somewhat or if EPS results begin to show impacts from a continued slowdown in the economy.
Notablecalls: Would not be surprised to see weakness in KSS today. The stock ended down $1 in after hrs trading but I suspect some of the positive comments from other firms will provide some initial support around the open.
Q3 EPS of $0.68 was $0.04 above Street's $0.65 estimate, $0.09 above the high-end of the $0.56-$0.59 plan, but $0.01 below DB $0.69 estimate. The $0.68 EPS result represents a strong +52.2% increase over $0.45 LY, but investors may have been seeking more, with whisper numbers looking for a 7-handle EPS. Reiteration of Q4 guidance versus JCP's $0.10 increase, the lack of share repurchases and likely fewer than the 115 planned FY07 store openings could pressure the shares, despite the very strong y/y EPS growth. Though they believe that KSS operations are hitting on all cylinders and sales comparisons are modest through the spring, they believe that this is already priced into the shares. Maintains HOLD rating.
The rate of share repurchases during the quarter slowed dramatically, with only about 1MM shares repurchased (at an average price of $66.54/share) versus 18.4MM share repurchases (at an average price of $55.74/share) in Q2:06. This implies that management may feel that the shares are a bit rich at today's levels, but also reflects a strong discipline in managing its cash. DB believes that this discipline should enable KSS to help support the stock should the shares trade down somewhat or if EPS results begin to show impacts from a continued slowdown in the economy.
Notablecalls: Would not be surprised to see weakness in KSS today. The stock ended down $1 in after hrs trading but I suspect some of the positive comments from other firms will provide some initial support around the open.
2 comments:
Not sure if you follow LMT but lost major defense contract to Boeing yesterday. Am looking at some early a.m. puts depending on their price increase and volume. Thought you might be interested.
Mark
Mark, thanks for the heads up. I think
UTX will also see some weakness today bc of the CSARX deal. UTX was considered to be among the main beneficiaries.
Post a Comment