Thursday, November 19, 2009

Remaining Bullish on Sears Holdings After Q3 Earnings

Today, Sears Holdings (SHLD) reported earnings and revenue that beat estimates. Some of the more positive notes were that KMart stores had positive comps and they bought back 3.5M shares. Continuing to shrink the float at a dramatic rate leaving very few shares not owned by strong institutions.

SHLD continues to be a very cheap stock compared to the asset base. See our previous posts on the details. Everybody will come out and scream how SHLD is a big short in the $70s because they make limited amounts of money. The PE is too large.... yada, yada, yada. SHLD is extremely cheap. Period!


6:09AM Sears Hldg beats by $0.28, beats on revs (SHLD) 75.77 : Reports Q3 (Oct) loss of $0.81 per share, excluding non-recurring items, $0.28 better than the First Call consensus of ($1.09); revenues fell 4.4% year/year to $10.19 bln vs the $9.92 bln consensus. Domestic comparable store sales declined 2.3% in the aggregate for the quarter, and included an increase at Kmart of 0.5%, offset by a decline at Sears Domestic of 4.6%. The Kmart quarterly increase in comparable store sales was primarily driven by the toys and home categories, as well as the impact of assuming the operations of its footwear business from a third party effective January 2009. Declines in sales for the quarter at Sears Domestic include decreases in the home appliance, lawn & garden, tools and home electronics categories, although sales in the home appliance category declined to a lesser degree as compared to previous quarters this year. Co reports $101 million reduction in selling and administrative expenses, adjusted for significant items discussed below, during the third quarter of fiscal 2009 as compared to the same quarter in 2008. Co reports cash balances of $1.5 billion at October 31, 2009 (of which $505 million was domestic and $1 billion was at Sears Canada) as compared to $1.2 billion at November 1, 2008 and $1.3 billion at January 31, 2009.

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