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Sears Holdings Corporation (SHLD): Today's Post-Market Laggard

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Sears Holdings Corporation ( SHLD) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Sears Holdings Corporation as such a stock due to the following factors:

  • SHLD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.7 million.
  • SHLD is down 2.8% today from today's close.

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More details on SHLD:

Sears Holdings Corporation operates as a retailer in the United States and Canada. Currently there are no analysts that rate Sears Holdings Corporation a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Sears Holdings Corporation has been 2.1 million shares per day over the past 30 days. Sears has a market cap of $3.7 billion and is part of the services sector and retail industry. The stock has a beta of 3.10 and a short float of 58.6% with 9.29 days to cover. Shares are down 33.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sears Holdings Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 2.44 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.19, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Multiline Retail industry and the overall market, SEARS HOLDINGS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SEARS HOLDINGS CORP is rather low; currently it is at 23.43%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.37% trails that of the industry average.
  • Net operating cash flow has decreased to $563.00 million or 42.43% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • SHLD's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 34.84%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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