Sears Holdings Corporation (SHLD)
- 68.39 (USD)
(+2.8 %)
9/3/2010 4:00:00 PM
SHLD Stock Report
NASDAQ:
SHLD
68.39
(USD)
(2.8 %
)
09/03 4:00 PM
Open
67.55
Day's Range
67.4
-
69.05
52Wk Range
60.12 - 125.42
Mkt Cap
6.9 Billion
Vol/Avg
875500/1.4 Million
Div/Yield
0.00%
Key Fundamentals
| Price (9/3/2010) | 68.39 |
|---|---|
| Volume (9/3/2010) | 875500 |
| Last Close Price | 68.39 |
| 10 Day Average Volume | 1.4 Million |
| 13 Week Price Range | 60.12 - 82.72 |
| 52 Week Price Range | 60.12 - 125.42 |
| LTM Revenue | 43.9 Billion |
| Shares Outstanding (1/31/2010) | 110.6 Million |
| Market Capitalization | 6.9 Billion |
| Shares Held By Institutions | 16.5 Million |
| Institutional Holders | 471 |
| % Shares Held By Institutions | 84.87% |
| Earnings Per Share (EPS) | 1.99 |
| P/E Ratio | 26.455 |
| Book Value Per Share | 76.9195 |
| Gross Margin | 27.77% |
| Annual Dividend | 0 |
| Dividend Yield | 0.00% |
| Beta | 1.635894 |
| Fiscal Year Ends | January |
About Sears Holdings Corporation
Sears Holdings Corporationis considered to operate in the Consumer Services sector. They specifically operate in the Department Stores business segment contained within the Retail - Department Stores industry.
Sears Holdings Corporation is the parent company of Kmart Holding Corporation and Sears, Roebuck and Co. Holdings was formed as a Delaware corporation in 2004 in connection with the merger of Kmart and Sears. The Merger, completed on March 24, 2005, combined two of America's oldest existing retail entities, both with origins dating to the late 1800s. The Company is a retailer with 2,235 full-line and 1,284 specialty retail stores in the United States operating through Kmart and Sears and 402 full-line and specialty retail stores in Canada operating through Sears Canada Inc. During fiscal 2009, the Company operated three reportable segments: Kmart, Sears Domestic and Sears Canada. As of January 30, 2010, Holdings operated a total of 1,327 Kmart stores across 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands. Most Kmart stores are one-floor, free-standing units that carry an assortment of general merchandise, including products sold under such well-known labels as Jaclyn Smith and Joe Boxer, and certain proprietary Sears brand products and services. As of January 30, 2010, Sears Domestic operations consisted of the following: Full-line Stores—908 broadline stores, of which 848 are full-line stores located across all 50 states and Puerto Rico, and which are primarily mall-based locations averaging 133,000 square feet. Full-line stores offer a wide array of products across many merchandise categories, including home appliances, consumer electronics, tools, fitness, lawn and garden equipment, certain automotive services and products, such as tires and batteries, home fashion products, as well as apparel, footwear and accessories for the whole family. Specialty Stores—1,284 specialty stores located across all 50 states and Puerto Rico, in freestanding, off-mall locations or high-traffic neighborhood shopping centers. Sears Canada, a consolidated, 73%-owned subsidiary of Sears, conducts retail operations in Canada similar to those conducted by Sears Domestic, with an emphasis on apparel and other softlines than in the U.S. stores. The KMART(r) and SEARS(r) trade names, service marks and trademarks, used by us both in the United States and internationally. The Company competes with Walmart, Target, Kohl's, JC Penney, Macy's, Home Depot, Lowe's and Best Buy.
Ockham's Rating/Recommendation Summary
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SHLD Revenue
As a value investing shop, we are interested in seeing how SHLD's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 8 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 0.41x and the low end of the range at 0.17x.
With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for SHLD of 0.18x is well below its normal historic Price to Sales levels. At a price of 68.78, SHLD is 38% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.
SHLD Cash Earnings
As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company's value, and currently SHLD is below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for SHLD, the current level of Cash Earnings compared to its historical levels helps identify where SHLD is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 46.75 and a historical low Cash Earnings per share ratio of 23.68, an investor can relate where value becomes optimal.
So what does a Cash Earnings ratio below the historical norm mean for SHLD? Generally, SHLD's investors have paid slightly higher stock prices for this level of Cash Earnings, which bodes well as a return to historical norms is statistically likely. However, it is never a guarantee that history gives us proper direction, particularly in fluctuating market cycles. So by utilizing a long term view and incorporating other areas of analysis (like Sales, Dividends, and management analysis), each investor can gain a more complete view of SHLD. Remember, that the average Cash Earnings level for SHLD has been 35.22, so the current Cash Earnings level of 35.11 is a positive in our view, but by no means is it overwhelming.
SHLD Dividends
When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for SHLD to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis. As far as our investing methodology goes, it is not necessary to pay a dividend in order to get a favorable rating, so as for right now SHLD gets a neutral rating for the dividend portion of the model. As you can see, we are not receiving historical dividend information from our data provider on SHLD at this time.