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What: Shares of retailer Sears Holdings
So what: Sears' revenues continued to slide in the first quarter, but a much better-than-expected operating loss -- $0.31 versus the consensus of $0.67 -- coupled with the Sears Canada spinoff announcement is reigniting hopes of a sustainable turnaround. Sears Canada has been a big drag on results in recent years, so focusing on the seemingly improving U.S. business seems like a particularly smart move at this point.
Now what: Management expects to generate between $1.6 billion and $1.7 billion in capital in 2012 through several actions including cost cuts, inventory reductions, asset sales, and spinoffs. "As evidenced by our improvement in operating performance and our other actions, we continue to focus on financial discipline and operational productivity, enhancing our already strong financial flexibility and unlocking value in our portfolio of assets," said CFO Rob Schriesheim. But while these cash-generating initiatives should certainly help boost the stock in the short term, the persistent trend of falling sales and shrinking market share continue to make Sears a questionable long-term pick.
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Fool contributor Brian Pacamparaowns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insightsmakes us better investors. The Fool's disclosure policyalways gets a perfect score.