TSC Ratings' Updates: Sears

EPS declined steeply in the most recent quarter compared with the same quarter a year ago. During the past fiscal year, Sanderson swung to a loss, reporting -$2.14 vs. $3.88 in the prior year. This year, the market expects an improvement in earnings to -7 cents.

Sanderson's share price has not changed much over the past year, due to the relatively weak year-over-year performance of the overall market and the company's stagnant earnings. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

We've downgraded retailer Sears Holdings(SHLD Quote) from hold to sell, driven by its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and poor profit margins.

EPS are down 3966.66% compared with the year-earlier quarter, and they have declined over the past two years. During the past fiscal year, Sears reported lower earnings of $5.80 vs. $9.62 in the prior year. For the next year, the market is expecting a further contraction of 90.2% in earnings to 57 cents. Net income has decreased by 3750%, from $4 million to -$146 million. Current return on equity is lower than its ROE from the same quarter one year prior, underperforming both the S&P 500 and the industry average. Sears' gross profit margin of 26.8% is low, having decreased from the same quarter last year, and its net profit margin of -1.4% trails the industry average.