Sears Holdings Corporation (NASDAQ: SHLD), which has the Sears and KMart department stores, is a very volatile stock.
While the beta for the overall stock market is 1, the beta for Sears Holding is 2.79.
That means that the share price for Sears Holding moves up and down almost three times as much as the stock market as a whole. Over the last year of market action, Sears Holding is off by nearly one-quarter (chart below). During that same period, it was a bull market for both the Dow Jones Industrial Average (NYSE: DIA) and the Standard & Poor’s 500 Index (NYSE: SPY).
Much of the volatility in Sears Holding can be attributed to the role of its real estate.
The business operations of Sears and KMart are very weak. The stock price decline is testament to that fact. Sales and earnings-per-share are both done over the last five years. It is much the same story on a quarterly basis, too. Sears Holding is losing out to very tough competitors like Amazon (NASDAQ: AMZN) and Wal-Mart (NYSE: WMT), in addition to having too many stores in too many fading malls.
But there is still value perceived by many in its real estate holdings.
That accounts for much of the volatility in the stock price. An article about Amazon buying the real estate of Sears to use as distribution centers sent the stock price higher on a temporary basis. That happened recently with another piece about the value of the real estate of Sears Holding.
But the share price has fallen from close to 50 to under 40.
It is difficult to see the value in the real estate of Sears Holding. There is an estimated one billion square feet of vacant commercial real estate in the United States. If the real estate owned by Sears Holding was that valuable, it would seem that the stores would be doing better rather than having declining sales!