Kohl’s Corporation (KSS): A Bull Case Theory

Ricardo Pillai

Mon, Jun 9, 2025, 6:26 AM 3 min read

We came across a bullish thesis on Kohl’s Corporation (KSS) by Hot_pressure_461 on r/valueinvesting on Reddit. In this article, we will summarize the bulls’ thesis on KSS. Kohl’s Corporation (KSS)'s share was trading at $8.13 as of 30^th May. KSS’s trailing and forward P/E were 7.46 and 50.76 respectively according to Yahoo Finance.

A woman in a retail store trying out a product, showcasing the retail colocation of the company.

Kohl’s Corporation (KSS) appears meaningfully undervalued when viewed through the lens of its real estate portfolio and embedded earnings power. Independent analysis of the company’s owned properties suggests a valuation range of $60–$75 per share, significantly above its current trading price. On the recent earnings call, management revealed that the future store format will be approximately 55,000 sq ft—much smaller than the 88,000 sq ft average of its owned locations—indicating a strategic shift that may unlock further value.

This shift could enable Kohl’s to monetize excess space through new tenant partnerships, with Planet Fitness cited as an early example. Rent from subleasing, coupled with tailwinds from the termination of the De Minimis exemption that previously allowed e-commerce imports from Temu and SHEIN to avoid tariffs, could conservatively add $2–$3 in EPS upside over time.

Additionally, Kohl’s reported earnings are materially understated due to depreciation of its real estate. Roughly $1 in EPS is being shielded annually from taxes through this accounting mechanism, which only becomes visible to investors when properties are sold. Meanwhile, even modest annual appreciation of 3% across its legacy real estate, most acquired over 15 years ago, implies another $2 per share in hidden value that also remains unrealized until asset sales occur.

Previous buyout offers exceeding $60 per share, although rejected, further underscore the asset-backed valuation floor. When considering both the unrecognized earnings power and the long-term asset value, Kohl’s presents a compelling value case with substantial upside and limited downside.

Previously, we have covered KSS in March 2025 wherein we summarized a bullish thesis by Hugo Navarro on Substack. The author argued the market had severely undervalued the company, despite strong free cash flow, manageable debt, and valuable real estate holdings. He saw CEO Ashley Buchanan’s turnaround plan and high short interest as catalysts for a potential re-rating, estimating intrinsic value between $22 and $70 per share. Since our last coverage, the stock is down 5%.