with 75% of operating income comming from the credit card operations this is a credit card company with a retail presence (to push its credit cards.) I strongly suggest owners of this stock review pvn a company who has similar customers and business lines. That stock is down from 60 to 31.5 over the last two months. today's rally is a chance to sell IT IS AS CLEAR AS GLASS
It is difficult to have a discussion with someone with their head where their ears are covered! What company projects its own stock prices?! and as I also posted who'd listen? It is a COMMON, well-understoon/acceptable principle that porjection figures come from PROFESSIONALs, not companies. Your misunderstanding in NO WAY indicates any contradiction in my posts. An opportunity for me to be even MORE clear possibly, but no contradiction.
You on the other hand, as posted previously, quoted the exact stock price range/direction of PVN and then claimed you weren't using that as part of the comparison to S. Who's contradicting themselves?
I do not argue that Sears is predominately a credit company - but PVN isn't a valid comparison. In fact, even with the 75% income from credit operations, Sears is still better compared to Penneys, Target, Wal-Mart, Home Depot, and other retailers.
Here's why the comparison to retail is more valid. PVN has credit operations in credit cards, home mortgage, auto loans, etc. Even within the credit card area, it's credit operations are dependent upon sales in retail, retaurants, hotels, air travel, etc. Meanwhile, the Sears credit revenue is almost entirely dependent upon operations of the Sears retail and service operations. So, slowdowns in home sales, auto sales, air travel, etc would directly affect PVN's revenue, but only slowdowns in retail and service on those retail products will affect Sears credit operations.
Because of this - As goes retail, so goes Sears credit and Sears as a whole. Sears, even with it's large credit base, is still better compared to other retailers, not PVN or other general purpose credit card businesses.
I disagree, while pvn does have more diversification with regard to thier generation portfolio the comparison is valid. It is valid because PVN is generally a subprime lender as is SEARS. Everyone knows if you can't get a real credit card you get a sears card to establish your credit. Sears customer base is "poor and patchy credit".
Last quarter the company increased provisions for uncollectable accounts from 215mm to 361mm and took another 522mm provision for previously securitized receivables. These write offs eliminated all retail profits. Lacy bragged they managed to grow their credit card receivables, despite the fact sales were down. (note same store sales were down 3% last month also) That means people are not paying off their credit cards , that implys a further weakening of credit card receivables quality.
No Virginia, there is no Santa Clause this year, and the credit quality deterioration that PVN is seeing Sears will be announcing soon (perhaps tomorrow when Lacy talks at the GS conference.) This quarters write offs will also eliminate all this quarters earnings, I'd be willing to bet 95% of the PVN customers also have a Sears card.
One more thing, expect to see automotive sales way down due to the bubble of tire sales from the firestone fiasco now popped.
You see it is not growth that is the question it is quality. Sears has a debt/equity level of 4.22x vs .6 for wmt .08 for HD 1.13x for tgt. Sears is a credit card company my friend and you can save yourself a lot of money selling the stock now if you own it. FD a vastly superior company trades at 1.2x book 1.2x book puts sears at 21, I would expect to see that level before Santa Clause.
don't bother deepharbor w/ facts he has proven immune to the 'virus' of logic...
Having read too many of deeps posts, he is probably referring to the fact that Providian deals mainly in poor or no history credit risks, unlike Sears, and other unfavorable news.
As further 'proof' that deepharbor isn't a deep thinker, he is putting down a company (PVN) with a solid balance sheet, good income, and fast growth. Their disappointing news, grabs big headlines, but anyone reading further would notice that this warning, is 'disguising' a 17-19% GROWTH RATE with a 20%+ projection for next year. WMT would like to be at that growth rate! PVN also has projected 12 mos. stock prices ranging from $50-$90! Yeah, that's the ticket just like Morgan Fairchild, I mean Sears...
I agree that that PVN is more at risk in short economy down turns, as most credit cards are used for impulse buys and it is assumed that these are the first expenses to go when money is tight.
I just couldn't resist tweaking deepharbor and his sense of humor?.