Kohl’s corporation
Kohl’s corporation is a department store that deals with the selling of footwear, accessories and casual apparel for all people that is men, women and children. The corporation also deals with home products like pillows and bed sheets and other house ware. Their apparel, accessories, and house ware are sold at moderate prices The Kohl’s corporation was established in 1988 and as at January 30, 2010 which was the end of the 2009 fiscal year, Kohl’s corporation had 1058 stores in operation within 49 states in the United States of America (United States Securities and Exchange Commission, 2010). These stores have quality brands and national brands which as they say are “only at kohl’s.” they sell apparel, accessories and home products that are appealing to classic and in fact modern classic. It also offers online purchasing which is a service that serves best since there are those customers who may prefer to shop online.
The online website is even beyond the stores in terms of the various items that a customer can select from. Kohl’s focus on the online purchasing is to extend sizes, their product lines (Kohl’s corporation, 2009). This online shopping is also meant to complement the focus of the in-store operation by providing a convenient environment for shopping and one that can be easily navigated. The Kohl’s corporation is highly committed to the community and to show this it operates Kohl’s cares program for kids in which it has contributed more than $126 million aimed at promoting the nation’s initiatives for children.Their financial statements are made using fiscal years but not the calendar years. This fiscal year comes to an end on every Saturday that comes immediately before January 31. For instance, the 2009 fiscal year came to an end on January 30, 2010. The fiscal years 2009, 2008, and 2007 are 52 week years. According to the United States Securities and Exchange Commission, (2010), their stock’s 52-week highs are $58.99 while the lows are $44.07. The stock’s beta is 0.98.
Ratios
P/E ratio = Market value per share / earnings per share
= $55.67 / $3.25 = 17.13
Return on Assets = (Net Income + interest expense)/total assets
= ($991 + $124) / $13160 = 0.085
Return on Equity = Net Income/Shareholder’s Equity
= $991 / $7853 = 0.126
Current ratio = Current assets / current liabilities
= $5485 / $2390 = 2.295
Revenue growth
Revenue growth for the last 12 months
= ($17178 – $16389) / $16389 * 100 = 4.81%
Revenue growth for the last 36 months
= ($17178 – $15597) / $15597 * 100 = 10.14%
EPS growth
EPS growth for the last 12 months
= ($3.25 – $2.89) / $2.89 * 100 = 12.46%
EPS growth for the last 36 months
= ($3.25 – $3.34) / $3.34 * 100 = -2.69%
Assuming that the company’s stock had a mean return of 14% and a standard deviation of 10%, with the stock’s historical returns being normally distributed the probability that this stock would yield a return below 14% is high. This is because the returns on stock will be highly spread from the mean. Standard deviation measures the spread of returns from the mean and a high value of standard deviation means that the stock returns are widely spread from the mean return on stock. Since standard deviation is used as a value for measuring how risky a stock is, it can be used to determine the probability of stock returns. Stock returns vary from the stock’s mean return and the greater the variation is, the more the stock is volatile and this is measured by the standard deviation. In this case, the standard deviation is high in comparison with the stock mean return. Therefore, the stock returns are highly volatile and this presents the high risk of yielding a stock return below 14%.Assuming that the company’s stock had a mean return of 10% and a standard deviation of 0%, with the stock’s historical returns being normally distributed, the probability of yielding a stock return below 10% is zero. Since the stock returns do not deviate from the stock’s mean return, all the stock returns will be equal to the stock’s average return. The stock returns will not vary from the stock’s mean return and therefore the stock is not exposed to any risks and it is also not highly volatile. Therefore, the company will not yield stock returns below 10%.
References
Kohl’s corporation, (2009). Kohl’s. Retrieved from: http://www.kohlscorporation.com. Accessed November 30, 2010.
United States Securities and Exchange Commission, (2010). Kohl’s corporation – form 10-k – march 19, 2010. Retrieved from: http://www.faqs.org/sec-filings/100319/KOHLS-CORPORATION_10-K/. Accessed November 30, 2010.
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