Kohl's Hidden Earnings: $4.15 Per Share Hidden From Net Income In 2023 Summary/Transcript

1. Hidden Earnings Insight:

   • The speaker estimates $415 million in "hidden earnings" for Kohl’s in 2023 due to accounting treatments.

   • This adjustment suggests Kohl’s real earnings are approximately twice as much as reported.

2. Depreciation from Real Estate:

   • Kohl’s owns $8.377 billion in buildings and improvements, depreciated over 39 years.

   • This depreciation shields $214.8 million from taxable income annually.

   • On a per-share basis, this translates to $1.93 per share in hidden earnings.

3. Finance Leases and Financing Obligations:

   • Kohl’s reported $340 million in expenses for these obligations.

   • However, actual cash payments were only $93 million, leading to a $247 million difference.

   • This amounts to $2.22 per share in additional hidden earnings.

4. Valuation Argument:

   • Adjusting for these hidden earnings suggests Kohl’s is trading at less than 2x earnings.

   • The speaker argues the stock could be valued at 8x earnings, implying a potential price target of around $40 per share compared to its current price under $12.

5. Final Takeaway:

   • The video encourages further research, highlighting the impact of accounting methods on Kohl’s apparent undervaluation.

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