Are These Higher Valuations Justified? – Barnes & Noble, Inc. (BKS) and More

Moreover, 2012 was a relatively tranquil appliance market from a promotional perspective, which may not be the case in FY 13. Nonetheless, there is no liquidity issue at the company, as the company has ample assets to sell and could continue to pull down inventory. However, the expectation that 2013 will be the third consecutive year of negative cash flow for the company raises the question of why operate? If Sears’ asset values are so good, why is Sears giving back four to five dollars a share in operating cash flow losses each year? Till the market gets solid answers for these questions, the stock remains a sell.

Foolish Bottom Line

One can decipher that higher valuations may not be justified for certain retailer players until and unless they bring some innovation to their business model that can help them to sustain earnings growth. Another conclusion that we can draw is that the rising use of Internet has been boon for some and a bane for others.

The article Are These Higher Valuations Justified? originally appeared on Fool.com and is written by Masam Abbas.

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