Kohl's Corporation (NYSE: KSS ) reported strong holiday-quarter numbers across the board on Thursday, but the stock initially traded lower by more than 7 percent. Investors may now be questioning Kohl's valuation after it gained more than 62 percent the past six months.

Kohl's reported fourth-quarter adjusted earnings per share of $1.99 and revenue of $6.78 billion. Both numbers topped consensus analyst estimates of $1.77 and $6.74 billion, respectively.

In addition, same-store sales growth for the quarter was 6.3 percent, beating consensus expectations of 5.7 percent growth.

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"We improved our merchandise margins through strong inventory management and improved promotional and permanent markdowns," CEO Kevin Mansell said in a statement. "All areas [of Kohl's] effectively managed their expenses."

Kohl's said it reduced excess inventory by 7 percent in 2017.

Kohl's also announced it will pilot test adding discount grocery store Aldi to as many as 10 of its stores later this year. Kohl's has been experimenting with how best to use its real estate to maximize its margins and efficiency. Kohl's already partners with Amazon.com ( AMZN ) to let customers buy Amazon devices on kiosks inside several Kohl's stores.

Looking ahead to 2018, Kohl's guided for same-store sales growth of 0 to 2 percent. The company expects revenue growth between negative 1 percent and positive 1 percent.

Kohl's 2018 EPS guidance of $4.95 to $5.45 beat consensus analyst expectations of $4.72.

Unfortunately for Kohl's investors, the stock traded lower Thursday morning as investors were unimpressed by the prospects of no revenue growth and little same-store sales growth in 2018.

Morningstar analyst Bridget Weishaar says there's plenty of reason for long-term investors to be cautious about Kohl's .

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"We think the growth of off-price retailers has eroded Kohl's brand positioning as the lowest-cost provider," Weishaar says.

"In the long run, we see mix shifts to e-commerce and national branded products, deleveraging and investments in technology further pressuring adjusted operating margin, resulting in a decline from 7 percent to close to 6 percent over the next five years."

Morningstar has an "overvalued" rating and $49 fair value estimate for KSS stock.

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