Fundamentals – HRB, JWN, KMX, KORS, KSS

HRB — H&R Block talks about the risk that governments will prepopulate the tax forms with a change in paperwork

JWN – Nordstrom’s has underperformed the stock market and there is talk about taking it private, but the general idea is a company can have a great balance sheet (which is usually priced in), and a great corporate strategy and business, but if it underperforms earnings expectations each quarter and have declining same store sales, the stock will take a beating. It’s almost as if the investment bankers have set up a casino about betting on earnings expectations that drives the stock price, but if they have it would be unwise to try to buck it so you should also note that retail stores like Nordstrom’s are missing their earnings expectations these days which may show something wrong with the business, e.g. more internet sales, but Nordstrom’s also offers returns after obscene lengths of time, and that sort of customer friendly business model may go away.

KMX – Carmax sells in the used car marketplace, with dealerships, and the idea is that the market is quite fragmented with less than 10% of the used car market being dominated by Carmax, but the relatively newer cars are the ones that Carmax deals with.

KORS – Michael Kors is a designer brand and has also had some problems in sales like Nordstrom’s.

KSS – Kohl’s has had some problems with sales but stock bounced back with an improvement in same store sales. Kohl’s targets more middle of the market department store crowd.


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