Why Sears Canada Shares Popped

Is this meaningful? Or just another movement?

The Motley Fool

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of embattled retailer Sears Canada (TSX: SCC) climbed 10% today after its quarterly results easily topped Bay Street expectations.

So what: The stock has soared over the past six months on optimism over management’s turnaround initiatives, and today’s Q3 results — adjusted EBITDA more than doubled on a revenue increase of 1.2% — only reinforce those good vibes. In fact, same-store sales were up for the first time since 2008, while management also declared a special $5 dividend related to recent asset sales, suggesting that the company is steadily becoming more efficient.

Now what: Management remains cautiously optimistic about its prospects going forward. “While we are pleased with our results for the quarter and October in particular, more work lies ahead of us to create a platform for sustainable growth,” said CEO Doug Campbell. “We are reestablishing fundamentals across the enterprise to ensure we have a solid foundation on which to continue growing the business.” Of course, with Sears Canada shares surging to a new 52-week high today and trading at a lofty EV/EBITDA of 35, much that turnaround talk might already be baked into the price.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Brian Pacampara owns no position in any of the companies mentionedThe Motley Fool does not own any shares of the companies mentioned.

More on Investing

data analyze research
Bank Stocks

Better Buy: Royal Bank Stock or Bank of Nova Scotia?

Bank stocks appear cheap after the latest plunge. Is Royal Bank or Bank of Nova Scotia a buy today?

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

3 Stocks to Anchor Your Portfolio in a Rocky Market

Three stocks are solid anchors in any portfolio today for their outperformance in a weak market and defiance of the…

Read more »

Metals
Metals and Mining Stocks

Better Metals Buy: Gold Stocks vs. Lithium Stocks

Gold is the evergreen choice as a hedge against inflation and weak markets. In contrast, battery metals may offer unique…

Read more »

Man making notes on graphs and charts
Bank Stocks

TD Bank Stock: A TSX Top Pick Amid U.S. Banking Rout?

TD Bank (TSX:TD) stock could prove a worthy bet for brave investors who aren't fearful over the recent wave of…

Read more »

edit Sale sign, value, discount
Tech Stocks

2 Cheap Tech Stocks to Buy Right Now

Many tech stocks offer exceptional returns compared to other stock sectors when the market is bullish. You can add to…

Read more »

money cash dividends
Dividend Stocks

3 Solid Dividend Stocks That Cost Less Than $30

Given their solid financials and healthy cash flows, the following under-$30 dividend stocks are a good buy in this volatile…

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Investing

Is Now the Right Time to Buy Fortis Stock?

Fortis stock looks cheap today. Should you buy now or wait?

Read more »

edit Woman calculating figures next to a laptop
Investing

TFSA Investors: 2 Stocks to Make the Most of a Sad-Trombone Economy

TFSA investors can make the most of the heightened volatility by taking positions in stocks with tremendous resiliency amid the…

Read more »