Filing Flows › Companies › Kohl's › Analysis traps
Kohl's (KSS): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q2 FY27, to Aug 1, 2026, filed Sep 3, 2026; rules v1.1
Kohl's (KSS): 1 rule of 10 triggered on the filings to Aug 1, 2026: FCF growth = the business improved. 2 to review; 1 with insufficient data; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
FCF growth = the business improved Triggered · severity medium · confidence high
Free cash flow rose $826M (+454%), from $182M to $1.0B, but working capital released $503M more cash than the year before and capital expenditure fell by $94M: 72% of the increase came from sources that need not repeat. Operating cash flow before working capital rose by $229M.
Innocent reading: An expansion programme finished, so capex fell back to maintenance levels for good.
Adjusted profit = economic profit To review · confidence low
Adjusted EPS was 10% or more above GAAP in 1 of the last 3 quarters: read the reconciliation before taking the adjusted figure.
A precise DCF value = the true value To review · confidence high
The DCF's point value is 48.31 a share (price 23.90); 49% of it is the terminal value, a number about years no one has seen. Moving operating margin by ±3 pts alone takes it from 16.69 to 79.93; across every method the research ran the range is 5 to 184. The value is a range; the decimals are not information.
Innocent reading: A stable, mature business with a narrow range of outcomes, where the point value is a fair summary.
Every rule
A01 FCF growth = the business improved Triggered severity medium · confidence high
Free cash flow rose $826M (+454%), from $182M to $1.0B, but working capital released $503M more cash than the year before and capital expenditure fell by $94M: 72% of the increase came from sources that need not repeat. Operating cash flow before working capital rose by $229M.
The figures and how they are read
| Fiscal year before | FY25 |
| Fiscal year | FY26 |
| Operating cash flow, year before | $648M |
| Operating cash flow | $1.4B |
| Capex, year before | $466M |
| Capex | $372M |
| Free cash flow, year before | $182M |
| Free cash flow | $1.0B |
| Change in FCF | $826M |
| Change in capex | −$94M |
| Working capital: change in its cash contribution | $503M |
| Of which: capex cut | $94M |
| Of which: working capital released | $503M |
| Share of the increase that need not repeat | +72.3% |
| Operating cash flow before working capital: change | 229000000.00 |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY26 (cash flow statement, fiscal year) · FY25 (cash flow statement, fiscal year before)
What would explain it innocently
- An expansion programme finished, so capex fell back to maintenance levels for good
- Suppliers agreed longer payment terms in a contract
- Inventory was brought down after a glut and will stay down
What to look for in the filing
- Maintenance capex (what it costs to keep the assets working)
- Supplier payment terms and any supply-chain financing
- Management's capex guidance for next year
What would show the trap does not apply
- Next year's FCF holds or rises with capex back at its earlier level and working capital no longer releasing cash
- The 10-K's capex guidance and the segment capex show the cut is a completed programme, not deferral
- The working-capital release matches a disclosed change in terms or a divestiture, not stretched payables or a collection push
Look again: next filing.
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 0.2% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY26 |
| Stock compensation | $34M |
| Revenue | $15.5B |
| SBC / revenue | +0.2% |
| Buybacks | 0 |
| Buybacks / SBC | 0.0 |
| Diluted shares, year before | 112.0M shares |
| Diluted shares | 114.0M shares |
| Diluted shares: change | +1.8% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY26 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Insufficient data
fewer than five quarters with receivables and revenue on file (a year-over-year comparison needs five)
B08 Adjusted profit = economic profit To review confidence low
Adjusted EPS was 10% or more above GAAP in 1 of the last 3 quarters: read the reconciliation before taking the adjusted figure.
The figures and how they are read
| Quarter / adjusted EPS / GAAP EPS / gap | 2025-10-31 / 0.1 / 0.07 / 0.3; 2026-04-30 / -0.13 / -0.13 / 0.0; 2026-07-31 / 1.28 / 1.28 / 0.0 |
| Quarters with adjusted ≥ 10% above GAAP | 1 |
| Quarters compared | 3 |
| Latest gap | +0.0% |
the analysts' 'actual' (usually the company's adjusted EPS) against GAAP net income ÷ diluted shares for the matching quarter; a gap of 10% or more counts (the stand-in until three releases' reconciliation tables are on file)
Source: 2025-10-31 (adjusted 0.10 vs GAAP 0.07) · 2026-04-30 (adjusted -0.13 vs GAAP -0.13) · 2026-07-31 (adjusted 1.28 vs GAAP 1.28)
What would show the trap does not apply
- The reconciliation shows the excluded items ending (a restructuring with its final charge, a settlement paid) and the gap to GAAP closes in the next quarters
- The excluded items are only amortisation of acquired intangibles and the cash paid for the deals is in the investing cash flow
Look again: next filing.
C02 Low net debt = no refinancing risk Not triggered confidence medium
Nothing comes due within a year; net debt is $504M.
The figures and how they are read
| Cash and investments | $821M |
| Debt | $1.3B |
| Net debt | $504M |
| Due within a year | 0 |
| Read from | the current portion of debt on the balance sheet |
| Free cash flow, twelve months | $1.0B |
| Cash plus free cash flow | $1.9B |
| Coverage of what is due | — |
| Due in the second year | — |
| Balance sheet date | 2026-08-01 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: 2026-08-01 (debt maturities, cash and investments)
D03 EPS growth = profit growth Not triggered confidence high
EPS fell 5% and net income fell 1% in Q2 FY27; the share count rose 3.5%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q2 FY27 |
| Quarter before | Q2 FY26 |
| EPS, year before | $1.34 |
| EPS | $1.28 |
| Net income, year before | $153M |
| Net income | $151M |
| Diluted shares, year before | 114.0M shares |
| Diluted shares | 118.0M shares |
| EPS growth | -4.6% |
| Net income growth | -1.3% |
| Diluted shares: change | +3.5% |
| eps from profit | -$0.02 |
| eps from share count | -$0.04 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q2 FY27 (net income, diluted shares, EPS) · Q2 FY26 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued Not triggered confidence medium
Net income of $270M is not at a cyclical high against the last eight years (median $317M, best $938M): the P/E of 10.4× is on a normal year.
The figures and how they are read
| market value | $2.8B |
| net income ttm | $270M |
| pe ttm | 10.40 |
| net income median fy | $317M |
| pe mid cycle | 8.90 |
| net income peak fy | $938M |
| years | FY19 / 801.0; FY20 / 691.0; FY21 / -163.0; FY22 / 938.0; FY23 / -19.0; FY24 / 317.0; FY25 / 109.0; FY26 / 272.0 |
| down years in window | 4 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q2 FY27 (net income, trailing twelve months)
E07 A precise DCF value = the true value To review confidence high
The DCF's point value is 48.31 a share (price 23.90); 49% of it is the terminal value, a number about years no one has seen. Moving operating margin by ±3 pts alone takes it from 16.69 to 79.93; across every method the research ran the range is 5 to 184. The value is a range; the decimals are not information.
The figures and how they are read
| dcf value | 48.31 |
| price | 23.90 |
| terminal value share | +48.7% |
| swing by input | Operating margin / ±3 pts / 16.69 / 79.93; Revenue growth (each year) / ±5 pts / 41.13 / 56.83; WACC / ±1 pt / 43.61 / 54.37; Capex (share of revenue) / ±1 pt / 43.55 / 53.06 |
| range all methods | 4.58; 183.84 |
the DCF's point value against the share of it that is the terminal value and the value at each input moved by one step (growth ±5 pts, WACC ±1 pt, margin ±3 pts …); the range across every method the research ran
Source: 2026-11-08 (valuation research)
What would explain it innocently
- A stable, mature business with a narrow range of outcomes, where the point value is a fair summary
- The inputs that matter most are themselves well known (a regulated return, a long contract)
What to look for in the filing
- Which input you believe differs from the research's and why
- What the price implies for growth (the reverse DCF on the fair-value page)
What would show the trap does not apply
- The DCF's value is robust to the terminal growth and discount rate (the range's low end is still above the price)
- The company's cash flows over the next three years track the DCF's early years
Look again: next filing.
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Kohl's: cash flow → Earnings quality score →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.