Price: $7.14
NCAV: $12.04
Tangible Book Value: $18.57
Earnings Per Share: (-$7.45)
Price/NCAV: 0.6x
Pice/Tangible Book: 0.4x
Overview
Sears Hometown & Outlet Store (SHOS, Financial) is selling close to its 52-week low and sells of less then its NCAV per share. The company is currently selling for 0.6x its NCAV and 0.4x its tangible book value. Sears Hometown has been seeing declining revenues and the company is currently in the red. Sears Hometown was spun off from Sears in 2012, Â a part of Sears' plan to unlock value for shareholders.
Company overview
The company is a retailer that sells home appliances, lawn and garden equipment, apparel, mattresses, sporting goods,and tools. Sears Hometown & Outlet stores have four subsidiary store formats. The company was founded in 2012 and spun-off from Sears Holdings(SHLD, Financial) in 2012 as well. Sears Hometown an its dealers and franchisees operate 1,239 stores in the Unites States, Puerto Rico, and Bermuda.
Sears Hometown Store Formats:
- Sears Hometown
- Sears Outlet
- Sears Hardware & Appliances
- Sears Hometown Appliance Showroom
Sears Hometown Stores:
- 944 Sears Hometown stores.
- 96 Hardware Stores.
- 76 home Appliance shownroom
- 143 Outlet Stores
Financial summary
Sears Hometown & Outlet store has, just like Sears Holdings, been seeing declining revenues and is in the red. Same store sales for Sear Hometown have been dreadful; with fourth quarter at -7.7% and full year of -5.6%. For the fiscal year ending in January 31, 2015, the company revenues decreased 3% to $2.3 billion. The company had a net loss of $168.8 million against income of $35 million. Revenues from Sears Hometown and Hardware segment decreased 7% to $1.9 billion. Sales for Hometown and Hardware decreased from -3.2% to -7.1%, retail sales for Hometown and Hardware decreased 7% to $1.69 billion. The bulk of the company's current assets are the firms inventory and the company has very little debt $84.3 million in short-term debt and only $200 thousand in long-term debt.
Valuation
The company sells for less then 0.6x its NCAV per share and less then 0.4x its tangible book value. Sears Hometown is also selling close to its 52-week low and has been underperforming the broader market as well as its retail competitors. The company has current asset of $497.3 million and $442 million are inventory, which is a challange to value but the company isn't swimming in debt and its current assets cover its short-term debts 5 to 1. With this said the company does have lots of problem just like Sears Holdings, and I don't know how or even when the company will have a turnaround. What I do know is the company has $12.07 per share in NCAV and currently selling for at least a 20% discount to NCAV. The company should sell for at least NCAV per share that would give anyone who invested in the company at least a 20% return on their investment.
