On Mar 29, Zacks Investment Research upgraded
Sears Holdings Corporation
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Sears has been witnessing rising earnings estimates on the
back of improved fourth-quarter fiscal 2012 bottom-line results.
Moreover, we believe that the company's strategic move toward
improving the health of the balance sheet through a string of
measures helped induce an upward movement in the estimates.
After reporting loss for three consecutive quarters, Sears
reported positive earnings of $1.12 per share, which was over two
times higher than the year-ago comparable quarters' earnings of
54 cents. The favorable bottom-line comparisons from last year
came on the back of Sears' ongoing cost reduction initiatives,
which lowered selling and administrative expenses during the
Of late, Sears had undertaken various initiatives to enhance
its growth prospects by reducing investments in those sections
that no longer contribute significantly to its growth. These
measures focus on optimizing the company's financial
As a major step in this direction, Sears Holdings completed
the partial spin-off of 45% of Sears Canada's common shares to
the company's shareholders on Nov 13, 2012. The company also
successfully completed the separation of Sears Hometown and
Outlet Stores Inc. on Oct 11, 2012, raising $446.5 million in
Apart from this, the company has been focusing on cost
containment, inventory management, and merchandise initiatives to
improve margins through leveraging buying and occupancy expenses.
We believe that Sears' turnaround strategies are paying off,
which is evident from its improved operating results for the
fourth quarter of fiscal 2012.
Currently, the Zacks Consensus Estimate for fiscal 2013 stands
at negative $3.00 per share, portraying an improvement of 16
cents in the last 30 days from a negative $3.16.
Other Stocks to Consider
Apart from Sears, other stocks in the departmental store
industry that are currently performing well include
Costco Wholesale Corp
The Kroger Co
). All these companies carry a Zacks Rank #2 (Buy).
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COSTCO WHOLE CP (COST): Free Stock Analysis
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SEARS HLDG CP (SHLD): Free Stock Analysis
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