Kohl’s Corporation (NYSE: KSS) and Dillard’s (NYSE:DDS) are both retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, risk, profitabiliy, analyst recommendations, valuation, earnings and dividends.

Earnings & Valuation

This table compares Kohl’s Corporation and Dillard’s’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kohl’s Corporation $18.56 billion 0.37 $2.33 billion $3.43 11.80
Dillard’s $6.33 billion 0.31 $552.91 million $4.86 13.97

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

Volatility and Risk

Kohl’s Corporation has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, Dillard’s has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Kohl’s Corporation and Dillard’s, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kohl’s Corporation 4 11 5 0 2.05
Dillard’s 2 2 1 0 1.80

Kohl’s Corporation currently has a consensus target price of $43.22, suggesting a potential upside of 6.83%. Dillard’s has a consensus target price of $55.80, suggesting a potential downside of 17.83%. Given Kohl’s Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Kohl’s Corporation is more favorable than Dillard’s.

Profitability

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

Net Margins Return on Equity Return on Assets
Kohl’s Corporation 3.25% 13.29% 5.02%
Dillard’s 2.50% 9.39% 4.05%

Dividends

Kohl’s Corporation pays an annual dividend of $2.20 per share and has a dividend yield of 5.4%. Dillard’s pays an annual dividend of $0.28 per share and has a dividend yield of 0.4%. Kohl’s Corporation pays out 64.1% of its earnings in the form of a dividend. Dillard’s pays out 5.8% 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. Kohl’s Corporation has raised its dividend for 3 consecutive years and Dillard’s has raised its dividend for 6 consecutive years.

Insider and Institutional Ownership

93.7% of Dillard’s shares are held by institutional investors. 1.2% of Kohl’s Corporation shares are held by insiders. Comparatively, 23.3% of Dillard’s shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Kohl’s Corporation beats Dillard’s on 11 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 Dillard’s

Dillard’s, Inc. is a retailer of fashion apparel, cosmetics and home furnishing. As of January 28, 2017, the Company operated 293 Dillard’s stores, including 25 clearance centers, and an Internet store offering a selection of merchandise, including fashion apparel for women, men and children, accessories, cosmetics, home furnishings and other consumer goods. The Company’s segments include the Retail operations segment and the Construction segment. The Retail operations segment includes the operation of the Company’s retail department stores. The Construction segment includes the operations of CDI Contractors, LLC (CDI), a general contracting construction company. CDI’s business includes constructing and remodeling stores for the Company. As of January 28, 2017, the Company operated retail department stores in 29 states, primarily in the southwest, southeast and midwest regions of the United States.

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