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Will Devere's  Instablog

I went to cash in November 2007 and have been actively trading my own account since October of 2008. (The fall of Lehman Brothers.) "Trading for a Living" by Dr. Elder inspired me to learn how to trade profitably. As a result, I have developed a set of trading rules for myself. One of... More
  • Macys Numbers May Indicate Weakness

    This analysis compares a portion of the balance sheets for these retailers:  Macys (M), Sears (SHLD), Walmart (WMT) and JC Penneys (JCP).   I’ve also included a word about the circumstances of Eddie Bauer (EBHI) compared to Macys.

     

                       Revenue      Debt            Cash

    Macys         25B             8.85B          295M

    Sears           46B             3.28B          1.6B

    Walmart     404B           43B             6.58B

    JC Penney   18B            3.51B          2.14B

     

    Based on these numbers, Macys ratio of debt to revenue looks out of proportion compared to its competitors:

     

    Macy's .35 (8.85B/25B) 

    Sears  .07

    Walmart .10

    JC Penneys .19

     

    In other words, Macys has almost twice the comparable debt load of JCP and five times the debt load of Sears.

     

    Yes, this debt load difference is reflected in the relative prices of the stock of the companies but the recent Chapter 11 filing of Eddie Bauer (EBHI) brings the Macy’s debt into question. 

     

    At the time of filing, EBHI reported 1B in revenue with 222M in debt and 206M in cash.  This is a debt/revenue ratio of .22, considerably less than the Macys number.  While JCP may at first glance look weak, consider their 2.14B of cash.

     

    Finally, earnings/share for the industry is -1 dollar.  Macys earnings/share is  -11

     

    I do not have a position in any of the stocks mentioned in this analysis.

    Jun 21 04:15 pm | Link | Comment!
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