Critical Contrast: Kohl’s (NYSE:KSS) & Canadian Tire (OTCMKTS:CDNAF)

Canadian Tire (OTCMKTS:CDNAF) and Kohl’s (NYSE:KSS) are both mid-cap consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Dividends

Canadian Tire pays an annual dividend of $5.13 per share and has a dividend yield of 3.9%. Kohl’s pays an annual dividend of $0.50 per share and has a dividend yield of 2.4%. Canadian Tire pays out 68.1% of its earnings in the form of a dividend. Kohl’s pays out 21.8% 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.

Analyst Ratings

This is a summary of current recommendations and price targets for Canadian Tire and Kohl’s, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canadian Tire	0	4	1	0	2.20
Kohl’s	5	8	1	1	1.87

Canadian Tire presently has a consensus price target of $205.00, suggesting a potential upside of 57.09%. Kohl’s has a consensus price target of $16.17, suggesting a potential downside of 23.86%. Given Canadian Tire’s stronger consensus rating and higher probable upside, research analysts clearly believe Canadian Tire is more favorable than Kohl’s.

Insider & Institutional Ownership

98.0% of Kohl’s shares are held by institutional investors. 1.5% of Kohl’s shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Canadian Tire and Kohl’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Canadian Tire	4.09%	10.84%	3.38%
Kohl’s	1.75%	6.75%	2.02%

Earnings and Valuation

This table compares Canadian Tire and Kohl’s”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canadian Tire	$11.68 billion	0.59	$376.67 million	$7.53	17.33
Kohl’s	$15.43 billion	0.16	$272.00 million	$2.29	9.27

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

Summary

Canadian Tire beats Kohl’s on 10 of the 15 factors compared between the two stocks.

About Canadian Tire

Canadian Tire Corporation, Limited provides a range of retail goods and services in Canada. It operates in three segments: Retail, CT REIT, and Financial Services. The Retail segment retails automotive maintenance products and accessories, parts, and tires, as well as automotive services and roadside assistance; electrical, hardware, home environment, paint, plumbing, and tool products; cleaning, food & drink, home décor, home essentials, home organization, kitchen, and pet care products; camping, exercise, hockey, hunting, fishing, seasonal recreation, and team sports and golf products; and backyard living, backyard fun, cycling, gardening, outdoor tools, seasonal, and toy products. This segment offers its products under the Canadian Tire, Canadian Tire Gas, Pro Hockey Life, Mark's, PartSource, Helly Hansen, Party City, and SportChek brand names. This segment also participates in loyalty programs, as well as sells its products online. The CT REIT segment operates as a closed-end real estate investment trust that holds a portfolio of properties comprising Canadian Tire stores, Canadian Tire anchored retail developments, industrial properties, mixed-use commercial property, and development properties. The Financial Services segment provides consumer credit cards, in-store financing, insurance products, and retail and broker deposits; and savings accounts and guaranteed investment certificates. Canadian Tire Corporation, Limited was founded in 1922 and is headquartered in Toronto, Canada.

About Kohl’s

Kohl’s Corporation operates as an omnichannel retailer in the United States. It offers branded apparel, footwear, accessories, beauty, and home products through its stores and website. The company provides its products primarily under the brand names of Croft & Barrow, Jumping Beans, SO, Sonoma Goods for Life, and Tek Gear, as well as Food Network, LC Lauren Conrad, Nine West, and Simply Vera Vera Wang. Kohl’s Corporation was founded in 1988 and is headquartered in Menomonee Falls, Wisconsin.