Sears (SHLD) Stock Soaring Today on General Growth Joint Venture

NEW YORK (TheStreet) -- Shares of Sears Holdings Corp. are higher by 10.20% to $45.60 at the start of trading on Wednesday morning, after the department store retailer announced that it has entered into a real estate joint venture with mall operator General Growth Properties . As part of the joint venture, Sears said it has contributed 12 Sears Holdings properties located at General Growth Properties' malls. The transaction is designed to unlock real estate value and enhance Sears' financial flexibility, the company said, adding that at the same time it will provide the joint venture the opportunity to create additional value through re-development and re-leasing of up to 50% of each property. "Today's announcement demonstrates our ability to unlock a small portion of Sears Holdings' vast and valuable real estate portfolio, and represents an important step in the continued transformation of Sears Holdings," company CEO Edward Lampert said in a statement. "We continue to show that Sears Holdings is an asset-rich enterprise with multiple levers to generate financial flexibility, while creating shareholder value. The joint venture and its structure are consistent with our transition from a store-focused network to a more asset-light, member-centric retailer and it provides additional capital to invest in the future of our membership and integrated retail platforms," Lampert continued. Additionally, Sears said it will raise over $2.5 billion by selling stores to a real estate investment trust it is going to set up as the company continues to try and strengthen its finances, Reuters reports.Lampert, who controls almost half of Sears, has launched a variety of what Reuters describes as "strange transactions," cut costs, and sold assets in order to try and fix the company, which has reported losses for the last 11 quarters. Recently, Lampert set up an REIT, Seritage Growth Properties, which will repurchase and lease back close to 245 Sears and Kmart stores.TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "Eddie Lampert has managed to stave off the grim reaper again but growth buyers are still turned off by the lack of same store sales increases. The real estate value is there though."Separately, TheStreet Ratings team rates SEARS HOLDINGS CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation: "We rate SEARS HOLDINGS CORP (SHLD) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins." Highlights from the analysis by TheStreet Ratings Team goes as follows: The gross profit margin for SEARS HOLDINGS CORP is rather low; currently it is at 24.42%. Regardless of SHLD's low profit margin, it has managed to increase from the same period last year. SHLD, with its decline in revenue, underperformed when compared the industry average of 2.3%. Since the same quarter one year prior, revenues fell by 23.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share. SEARS HOLDINGS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEARS HOLDINGS CORP reported poor results of -$15.83 versus -$12.86 in the prior year. This year, the market expects an improvement in earnings (-$8.93 versus -$15.83). The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 55.6% when compared to the same quarter one year prior, rising from -$358.00 million to -$159.00 million. Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year. You can view the full analysis from the report here: SHLD Ratings Report Must Read: Warren Buffett's Top 25 Stocks for 2015

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