Head-To-Head Comparison: Nordstrom (JWN) and Kohl’s Corporation (KSS)

Kohl’s Corporation (NYSE: KSS) and Nordstrom (NYSE:JWN) are both mid-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, earnings, dividends, valuation and profitability.

Dividends

Kohl’s Corporation pays an annual dividend of $2.20 per share and has a dividend yield of 5.9%. Nordstrom pays an annual dividend of $1.48 per share and has a dividend yield of 3.3%. Kohl’s Corporation pays out 56.4% of its earnings in the form of a dividend. Nordstrom pays out 70.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Nordstrom has increased its dividend for 6 consecutive years. Kohl’s Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Kohl’s Corporation and Nordstrom’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kohl’s Corporation $18.52 billion 0.34 $2.31 billion $3.90 9.56
Nordstrom $15.00 billion 0.49 $1.69 billion $2.11 21.01

Kohl’s Corporation has higher revenue and earnings than Nordstrom. Kohl’s Corporation is trading at a lower price-to-earnings ratio than Nordstrom, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Kohl’s Corporation and Nordstrom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kohl’s Corporation 3.63% 13.16% 4.95%
Nordstrom 2.44% 71.57% 7.19%

Volatility and Risk

Kohl’s Corporation has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500. Comparatively, Nordstrom has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Kohl’s Corporation and Nordstrom, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kohl’s Corporation 4 11 5 0 2.05
Nordstrom 3 14 7 0 2.17

Kohl’s Corporation presently has a consensus target price of $43.34, suggesting a potential upside of 16.26%. Nordstrom has a consensus target price of $48.27, suggesting a potential upside of 8.89%. Given Kohl’s Corporation’s higher probable upside, analysts clearly believe Kohl’s Corporation is more favorable than Nordstrom.

Institutional and Insider Ownership

66.5% of Nordstrom shares are owned by institutional investors. 1.2% of Kohl’s Corporation shares are owned by insiders. Comparatively, 7.0% of Nordstrom shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Nordstrom beats Kohl’s Corporation on 9 of the 17 factors compared between the two stocks.

About Kohl’s Corporation

Kohl’s Corporation (Kohl’s) is an operator of department stores. The Company operates approximately 1,154 Kohl’s department stores, a Website (www.Kohls.com), approximately 12 FILA outlets, and approximately three Off-Aisle clearance centers. The Company’s stores and Website sell moderately-priced private label and national brand apparel, footwear, accessories, beauty and home products. The Company’s Website includes merchandise that is available in its stores, as well as merchandise that is available only online. The Company’s merchandise mix includes both national brands and private brands that are available only at Kohl’s. The Company’s private brands include Apt. 9, Croft & Barrow, Jumping Beans, SO and Sonoma Goods for Life. The Company’s exclusive brands include Food Network, Jennifer Lopez, Marc Anthony, Rock & Republic and Simply Vera Vera Wang.

About Nordstrom

Nordstrom, Inc. is a fashion specialty retailer in the United States. The Company’s segments include Retail and Credit. As of March 20, 2017, the Company operated 344 the United States stores located in 40 states as well as an e-commerce business. The Company also offers its customers a variety of payment products and services, including credit and debit cards. As of March 20, 2017, the Retail segment included its 117 Nordstrom-branded full-line stores in the United States and Nordstrom.com, 216 off-price Nordstrom Rack stores, five Canada full-line stores, Nordstromrack.com/HauteLook, seven Trunk Club clubhouses and TrunkClub.com, two Jeffrey boutiques and two clearance stores that operate under the name Last Chance. The Company, through Credit segment, allows its customers to access a range of payment products and services, including a Nordstrom-branded private label card, approximately two Nordstrom-branded Visa credit cards and a debit card for Nordstrom purchases.

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