essays pieces of the puzzle
Thursday, September 27th, 2012
the size of the box

The 1980s and 1990s saw the rise of stock prices and big box stores — and the stocks of big box stores.  Since then, not so much for any of the above.

The chart shows stock performance and fundamental results for Staples (SPLS).  The top panel has the stock performance.  Since the end of 1999, the stock has returned 1% total.  That lags the S&P 500 and the consumer discretionary sector fund (XLY).

There’s still close to a billion in net income a year, more in cash flow (middle panel), but the sales growth isn’t there.

The stock is cheap and has a fat yield, but (to refer to yesterday’s topic) the company has no moat to protect itself.  It is shutting stores, but is that enough?

Big boxes used to be the place to be.  When you look around, it seems like more and more of them are not.  Those boxes could turn out to be value traps.  (Chart:  Bloomberg terminal.)