Kirkland’s, Inc (NASDAQ:KIRK): A Small Cap Stock With 50% Upside

- January 3, 2017

Kirklands_stockKirkland’s, Inc. (NASDAQ:KIRK) is a specialty retailer of home decor and gifts in the United States.  It operates approximately 380 stores in 35 states, as well as an e-commerce enabled Website.  In 1966, Kirkland’s was co-founded by Carl Kirkland in Jackson, TN. Its headquarters is located in Brentwood, TN.

Kirkland’s is a home decorating store with furniture, accents, wall decor and a wide variety of holiday decorations for every season.  They have finishing touches for every room in the house, and even for the college student’s dorm room. At Kirkland’s they have something for just about everyone, and it’s a great store for finding the perfect gift at very reasonable prices.

New initiatives are already proving successful

In 2005, Kirkland’s (NASDAQ:KIRK) detached from their mall roots and transitioned more than 200 stores out of mall locations.  They positioned their stores into more accessible shopping centers.  This has allowed Kirkland’s to expand the size and mix of merchandise, making it easier for customers to purchase larger items for their homes, like lounges, couches, and vanity sets.

Like many retailers, Kirkland’s has been struggling with low traffic in the past five quarters.  Mainly because more people are inclined towards online buying.  In order to match this trend, the company started focusing on e-commerce sales.  Management came up with strategic plans to improve traffic at stores.

The company identified certain core focus areas. This includes improving in-store productivity, enhancing its omni-channel platform, optimizing real estate and reinforcing a culture of continuous improvement.

Kirkland’s beat both top and bottom-line estimates in the recently reported third-quarter fiscal 2016, driven by its strategic initiatives.

KIRK stock outlook

KIRK stock is trading at $15.51. However, the consensus price target for KIRK stock was recently revised up to $23.17 in 12 months. If KIRK stock were to reach its price target, current investors would realize gains of approximately 50%.

All six sell-side analysts rate KIRK stock a “Buy”. With a market capitalization of $240 million, KIRK is not a stock most investors follow. However, its a company with consistent growth and profits that trades at a cheap valuation because it is a small regional retailer. However, small regional retail stocks are just as likely to soar higher as the big ones. In this instance, Kirkland’s stock could very well meet analyst expectations.

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