The recent announcement that Sears will spin off Lands' End was not unexpected, and it is conceivable that the company will continue to ditch some of its better businesses, such as Kenmore, Craftsman and its Auto Centers, in hopes to keep it afloat.
In 2012, the company spun off Sears Hometown and Outlet (SHOS), which operates more than 1200 stores in the U.S. The stock, somewhat surprisingly, ran up 85% between October 2012 and the following June, but has since given back all of those gains and more. Shares now trade at an all-time low. Interestingly, the company, which is profitable and currently trades at 12 times trailing earnings, has no analyst coverage.
Revenue was up less than 1% last quarter, and net income fell 21% to $7.7 million, or 33 cents a share. Still, this stock appears to have been overly punished, down 43% since September. Perhaps it's due to the perception that this quarter will not be strong, given the bad news from other retailers. However, it could also be that it is too closely associated with Sears Holdings.
SHOS data by YCharts
Sears Hometown Outlet hit my radar recently because it is a new addition to my "double net" screen, which reveals companies trading at less than two times net current asset value. In fact, the stock currently trades at just 1.84 times NCAV. Profitable companies trading at less than two times NCAV can be very compelling, and the company is now on my watch list.Perhaps one of the moves the company should consider at this point is a name change. These days, being associated with Sears -- at one time was the retailer of choice -- is not a positive for investors. At the time of publication the author held no positions in any of the stocks mentioned. Follow @JonMHellerCFA This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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