Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, broadline retailer Sears Holdings (Nasdaq: SHLD) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Sears' business and see what CAPS investors are saying about the stock right now.

Sears facts

Headquarters (Founded)

Hoffman Estates, Ill. (1899)

Market Cap

$9.04 billion


Department stores

Trailing-12-Month Revenue

$43.33 billion


Chairman Edward Lampert
CEO Louis D'Ambrosio

Return on Equity (Average, Past 3 Years)



$1.38 billion / $3.53 billion

Competitors (Nasdaq: AMZN)
Target (NYSE: TGT)
Wal-Mart (NYSE: WMT)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 30% of the 2,155 members who have rated Sears believe the stock will underperform the S&P 500 going forward. These bears include All-Stars hot1053 and kristm, both of whom are ranked in the top 3% of our community.

Late last year, hot1053 seriously questioned the Sears bull case:

Where is the growth to justify it's valuation? Why are they not upgrading their stores? What makes them think that online retailing will save them? What are they going to do with their depressed real estate which are located in the best places? I don't think Eddie [Lampert] has a chance to turn this company around.

In fact, Sears' three-year average return on equity (1.9%) is substantially lower than that of competitors like Amazon (25%), Target (17.1%), and Wal-Mart (21.2%).

In a January reply to that pitch, kristm expanded on the underperform argument:

Closing stores and selling property (especially in this commercial real estate market), while doing nothing to shore up the business -- terrible advertising, weak product selection, ugly outdated stores -- is akin to burning the furniture for heat. Eventually you run out of furniture and freeze to death. SHLD is a dog, a real dog. K-Mart is an anchor tied to Sears, and Sears itself isn't much of a boat to begin with.

What do you think about Sears, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Wal-Mart, which is an Inside Value and Global Gains pick. The Fool owns shares of Wal-Mart. Try any of our Foolish newsletter services free for 30 days.

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