Dividend yield consistency remains a factor in long-term KSS stock forecast calculations, attracting income-focused investors despite short-term volatility. “Now consider the case of Kohl’s, a former jewel of a chain that’s fallen on hard times, cutting its dividend today from 50 cents to 12.5 cents. Not good. Kohl’s is still making some money, but they’re forecasting a huge reduction in earnings—10 to 60 cents versus $1.24 the analysts were expecting. More important, they see same-store sales down 4 to 6% when the analysts were expecting only to be down 1%. Ouch, that’s very bad.” The bottom line: We are not making any change to our $40 fair value estimate and view the shares as very undervalued. Although we rate Kohl’s as having no moat, we do not think the current valuation reflects its prospects for sales and operating margin improvement over the next few years. Macro retail environment updates impact KSS stock forecast positively; falling freight costs could boost net margins, aligning with industry recovery in late 2024.
