Does Sears deserve a $6 price target?
One analyst firm says the retailer's operating performance continues to deteriorate.
The move comes as other analysts expect Sears, which also owns the struggling Kmart chain, to move from annual profits to losses. The company lost $421 million in the quarter ended Oct. 29 and is expected to report a loss for the full fiscal year.
Post continues below.
And while Sears bulls have long praised the stock as a real-estate play, analysts at Imperial Capital think that benefit is outweighed by the company's underfunded pension plan and deteriorating operating performance.
Cash pension and post-retirement funding costs will hit around $316 million for the fiscal year ending in January, the analysts note, according to Notable Calls. Also, the chain's poor financial performance is draining cash and will need more debt.
Even Sears' iconic brands, which include Craftsman, Kenmore and DieHard, don't sell well enough to make up for the underperforming retail operations, the analysts added.
The analysts also took issue with Sears' employees, saying store-level staff is "unmotivated and poorly trained for the most part." And competition continues to grow from the likes of Lowe's (LOW), Home Depot (HD), Target (TGT) and Wal-Mart (WMT).
So how did the analysts get to that $6-a-share valuation? They started off with an enterprise valuation of about $6.5 billion, but once they deducted the secured and unsecured debt and the pension and post-retirement liabilities, they came up with equity value of just $591.8 million -- or $6 a share.
The analysts, to no one's surprise, have an "underperform" rating on the stock. Sears shares fell 2.4% Friday to $56.95 at midday.
Bunch of old men chatting with each other and ignoring the line building up at the register.
LOL - at the local Sears - it is a bunch of barely out of teens young guys and gals who stand around talking - ignoring customers - or - acting like the customer is such a bother to deal with.
Maybe the problem is not the age - but poor training and supervision.
Sears is such a joke. I can't fathom how they continue to stay in business. I recently went with a friend to purchase a lawnmower. It took over ONE HOUR, as each salesman kept passing the buck to another one. Even though the mower was listed as being in stock at that store on their website, it wasn't. Even my friend, who has the patience of Job, was pretty angry by the time we left. For a company that used to represent the backbone of American commerce, they have fallen so far it is unbelievable. The CEOs of Sears should be embarrassed.
A lot of people had high hopes when Eddie Lampert bought it. There was talk he would get top dollar for some of the excess real estate and turn it into a holding company where he could use the cash flow to benefit the shareholders. That hasn’t happened so far.
He’s also a finance guy with no expertise in retail and that’s showing. He’s had about four or five different strategies and CEO’s in as many years and that is the crux of the problem.
What Sears needs is a seasoned CEO who has time to implement a strategy and turn the company around. They have some good brands and locations, and they should be able to do much better than they are. Time will tell if they’re able to make a go of it.
At this point buying shares of Sears is like buying a lottery ticket. It has the potential to pay off big, but it’ll most likely end up being a loser.
I went in last weekend to simply get a new battery air gun for my dad for christmas. They had none on the shelf and I went over to the "manager" who was my age 25ish. I asked if he could look it up and get me one. He first says there is one right there, trying to get out of actually helping me. There was not(Not like I just didn't take my time to make sure there was not, and he saw me as I looked). Then he has to ask an associate to locate them. She says there are 5 in the warehouse. So he is like let me find some one to get that for you.
Give or take 10 minutes later after he does NOT locate someone, he "painstakingly" has to go look himself. It took 30, let me repeat, 30 minutes to get that product for me. I scolded the manager paid for my air gun then left. I love craftsman, great working mans tool with a solid guarantee. But the stores employees ALL have their own agendas instead of what can I do for the customer. Not to mention the horrendous service that was Black Friday......
If Sears, or ANY retail sales thinks by keeping us in the store longer will make us buy more is so far from the truth, it makes me sick to think we(the consumer) are that stupid/dumb. If the service was good, sure, but not with sh*t service. I want OUT.
Put a fork in Sears. I get emails almost daily from them begging for business. I briefly looked a coffee maker on their site. Now I get emails offering discounts on coffee makers! Even discounted their prices are too high! Sears needs to do a lot of things different and most of it I think is too late.
Their Web site is a joke, their stores are not attractive and their business model is so broken no super glue can fix it. Its too bad but they have lost the image people used to go to for shopping. Now its WalMart and Target.
I really liked Sears tools department. Mostly Craftsman. Now, they are so expensive that I don't even buy them. Also, when they publish the shoppers on the news paper, they tell you, for instance, was a $150.00, reduce to $90.00 and 10% with your Sears card. Suddenly I remember that I bought the very same tool for $75.00 (regular price) two weeks ago. Seems to be that Sears doesn't,t know that CREDIBILITY is an important part of business. If you loose it, "you're closed for business"
Sorry about you.
As a GI in W. Germany in the early 60s for 30 months I often ordered civies from a Sears catalog if I couldn't find what I wanted in the Post PX. Six bucks for cotton pants, etc. I think it peaked in the early 70s as far as sales and service are concerned. Since then it has gone downhill, with dingy stores and bad service.
always bought everthingthing at sears .Bought washer and dryer last jan, because ours was out.was on vacation when delivered to house (4 days late).thier delivery company hooked it up wrong (notated by sears tech). my kids ..17 and 20 went to wash clothes and left.Because washer was hooked up incorrectly had water damage leak into the basement ruining keepsakes old computers wit pics , putting a stain on carpet that wont come out .sears blames the delivery company and i toldthem i bought this from sears not the delivery company ,than turned over supposedly to thier ins co sedgewick which is a joke... only person that will call you back is kiara (who works for sears social media),not sedgewick and all im told is we,ll reach out to sedgewick every month when she calls me.... and she understands my frustration...if you did you would gt this corrected, no follow up by manager Adam at tuttle crossing in columbus ohio or salesman that wouldnt get a service guy out for 3 days and told my son he would deal with his p.o dad (me) when i got back from vacation' who didnt even want to see damage pictures
and evertime kiara goes on 3 way call with sedgewick the person is out or my case reassigned just to delay this longer(and i have been more than patient) and this with me being a GREAT sears customer.... imagine if you werent one of thier best customers .Next letter is to the ohio attorney general.... and you wonder why people are shopping elsewhere.
I don't know of any Craftsman Brand tools made in China like some say here? I could be wrong but I have buy their socket sets only because they are made in USA this helps keep American jobs in the USA, Sears is not all bad they have lots of tools you can not find any where else, and it is the only store a man can shop at in the mall that has manly clothes, and manly tools.
I do wish they would bring back the gun departments to all stores, and on line, makes them look anti-gun not selling them in their sporting goods any more.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
With the universe of this category in its seasonal sweet spot, these picks have tailwinds propelling them into the new year.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.