Reviewing Sears (SHLD) and Sears Hometown and Outlet Stores (SHOS)

Sears (NASDAQ:SHLD) and Sears Hometown and Outlet Stores (NASDAQ:SHOS) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, dividends, profitability, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares Sears and Sears Hometown and Outlet Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sears -9.27% N/A -18.48%
Sears Hometown and Outlet Stores -3.94% -35.77% -15.25%

Earnings & Valuation

This table compares Sears and Sears Hometown and Outlet Stores’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sears $16.70 billion 0.00 -$383.00 million N/A N/A
Sears Hometown and Outlet Stores $1.72 billion 0.03 -$95.05 million N/A N/A

Sears Hometown and Outlet Stores has lower revenue, but higher earnings than Sears.

Analyst Ratings

This is a summary of recent recommendations and price targets for Sears and Sears Hometown and Outlet Stores, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sears 2 0 0 0 1.00
Sears Hometown and Outlet Stores 0 0 0 0 N/A

Sears currently has a consensus price target of $2.62, suggesting a potential upside of 1,207.50%. Given Sears’ higher possible upside, equities research analysts clearly believe Sears is more favorable than Sears Hometown and Outlet Stores.

Insider & Institutional Ownership

57.6% of Sears shares are held by institutional investors. Comparatively, 45.5% of Sears Hometown and Outlet Stores shares are held by institutional investors. 56.8% of Sears shares are held by company insiders. Comparatively, 0.6% of Sears Hometown and Outlet Stores shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Sears has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500. Comparatively, Sears Hometown and Outlet Stores has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

About Sears

Sears Holdings Corporation operates as an integrated retailer in the United States. It operates in two segments, Kmart and Sears Domestic. The Kmart segment operates retail stores that offer a range of products, including consumer electronics, seasonal merchandise, outdoor living, toys, lawn and garden equipment, food and consumables, and apparel; and in-store pharmacies. It provides merchandise under the Jaclyn Smith, Joe Boxer, Route 66, Cannon, Adam Levine, Levi's, Lands' End, and Craftsman labels; Sears brand products, such as Kenmore and DieHard; and Kenmore-branded products. As of February 3, 2018, this segment operated approximately 432 Kmart stores. The Sears Domestic segment operates stores that provide appliances, consumer electronics/connected solutions, tools, sporting goods, outdoor living, lawn and garden equipment, apparel, footwear, jewelry, and accessories, as well as automotive services and products, such as tires, batteries, and home fashion products. It also offers parts and services to builders, developers, designers, and commercial and residential customers; parts and repair services for appliances, lawn and garden equipment, consumer electronics, floor care products, and heating and cooling systems; home improvement services, such as siding, windows, cabinet refacing, kitchen remodeling, roofing, carpet and upholstery cleaning, air duct cleaning, and garage door installation and repair; and protection agreements and product installation services. This segment provides merchandise under the Kenmore, DieHard, WallyHome, Bongo, Covington, Simply Styled, Everlast, Metaphor, Roebuck & Co., Outdoor Life, and Structure brands, as well as under the Craftsman, Roadhandler, and Levi's, brands. This segment operated 547 full-line stores and 23 specialty stores. Sears Holdings Corporation was founded in 1899 and is based in Hoffman Estates, Illinois.

About Sears Hometown and Outlet Stores

Sears Hometown and Outlet Stores, Inc. engages in the retail sale of home appliances, lawn and garden equipment, tools, and hardware in the United States. The company operates in two segments, Sears Hometown and Hardware, and Sears Outlet. The Sears Hometown and Hardware segment operates Sears Hometown Stores that offer products and services across a selection of merchandise categories, including home appliances, lawn and garden equipment, tools, sporting goods, and household goods; and Sears Hardware Stores, which provide products and services across a range of merchandise categories, such as home appliances, lawn and garden equipment, tools, other home improvement products, fasteners, electrical supplies, and plumbing supplies. It also operates Sears Home Appliance Showrooms that offer home appliances and related services in stores primarily located in strip malls and lifestyle centers of metropolitan areas. The Sears Outlet segment provides in-store and online access to purchase outlet-value products across an assortment of merchandise categories, including home appliances, mattresses, apparel, sporting goods, lawn and garden equipment, and tools, as well as other household goods, such as furniture. This segment also sells its products and services through searsoutlet.com. The company also offers various services, such as home delivery, installation, and extended service plans. As of May 05, 2018, the company, and its dealers and franchisees operated 882 stores in 50 states in the United States, as well as in Puerto Rico and Bermuda. Sears Hometown and Outlet Stores, Inc. is headquartered in Hoffman Estates, Illinois.

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