Kohl's Corporation (KSS 1.52%) stock took investors for a rollercoaster ride Tuesday morning. Reporting Q4 earnings, the stock fell 3%, then flipped and surged more than 14%, before pulling back to a 7.1% gain as of 11:20 a.m. ET.
Analysts forecast Kohl's would earn $0.85 per share on sales just over $5 billion. In fact, Kohl's earned $1.07 per share despite missing sales slightly.
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Kohl's Q4 earnings
The news wasn't all good. Kohl's $5 billion in sales fell short of expectations, with net sales down 4% year over year and same-store sales falling 3%. Full-year sales results also shrank 4% and 3%.
On the earnings front, things looked a lot brighter. Quarterly profits surged 149% year over year. For the full year, Kohl's earned $2.38 per share, up 143% year over year.
Arguably, the best news of all was on free cash flow. Kohl's generated more than $1 billion in FCF in 2025, more than five times the $182 million the company generated in 2024.
NYSE: KSS
Key Data Points
Is Kohl's stock a buy?
CEO Michael Bender rightly pointed out that this was a "meaningful" improvement. But can Kohl's keep it going? Turning to guidance, management forecasts a slight improvement in sales trends this year, predicting both net and same-store sales in 2026 will range from flat to down 2% versus 2025.
Management forecast about a 4% decline in "adjusted" earnings. Still, capital spending will hold roughly steady in the $350 million to $400 million range. Thus, if Kohl's can generate as much cash flow this year as it did last year, free cash flow should at least hold steady.
At $1 billion in FCF and an enterprise value just over $8 billion, Kohl's stock looks like a buy to me.
