YTD stock movement
As of May 15, Sears Holdings (SHLD) stock is down 2.2% to $3.50 on a YTD (year-to-date) basis. In contrast, Macy’s (M) stock has risen 18.8% to $29.93, while Kohl’s (KSS) stock had risen 16.5% to $63.19 YTD. On the other hand, JCPenney (JCP) has fallen 7.9% to $2.91 on a YTD basis as of May 15, 2018.
Dead cat bounce?
Sears’s YTD stock price losses have narrowed significantly after the stock surged following two big announcements in the past few days. On May 14, 2018, Sears stock rose 6.7% following the announcement of a potential sale of assets including Kenmore. Before that, on May 9, news of a partnership with Amazon (AMZN) to provide free tire installation caused Sears stock to jump 15.9%.
Most of the recent stock price surge seems to be a dead cat bounce. Sears remains mired in troubles. Sales are decelerating, and profitability remains elusive. The company is bleeding cash and has been obtaining debt financing to run its operations. Moreover, it is selling assets to pay down debt. There is widespread speculation about Sears filing for bankruptcy sooner or later. In 2017, Sears stock fell over 61.5%.
The expansion of e-commerce has hurt most traditional retailers like Sears as well as Macy’s, Kohl’s, and JCPenney. However, in Sears’s case, apart from online commerce, several self-harming managerial decisions have also hurt its growth prospects.
As of May 15, 2018, Sears was rated as a “sell” by the only analyst covering its stock. Currently, the 12-month target price for the company is $2.00, which reflects a 42.9% downside to its stock price as of May 15.