Oh dear, retailers haven't been fairing so well lately, have they? Carpetright (LON:CPR) recently issued a profit warning, as reported here on Stockopedia. Dixons' recent trading statement also reported deteriorating conditions. The stock market pros have been shuffling their holdings in Dixons throughout last week. Nearly all of them are lightening up their holdings on Dixons, according to the RNS filings, with only Skagen reporting an increase in their stake. It should be noted that in this article I am only concentrating on "general" retailers, and specifically excluding food and drug retailers, for whom I have a much different perception.
Overdone share price drops, or more yet to come? More on that later, but first some statistics. Here are a complete list of retailers that pass on my Magic Formula screen, together with some stats:
LEGEND:
EPIC - company code
Z - z-score - above 3 is acceptable, below 3 is much more marginal
CASH - net cash in £m. Negatives imply net debt
PROFIT - profit £m for latest financial year
YLD - dividend yield %
NAME - name of the company
Note that the cash and profit figures for JD., DXNS and Home Retail Group (LON:HOME) are the latest available year-end figures, which are over 6 months old. Be warned. Figures are taken from Sharelock Holmes. The first take-away from the table is that some companies are sitting on cash, and some are saddled with debt. Applying a strict z-score filter of at least 3 would lead us to rule out Debenhams (LON:DEB) and Dixons Retail (LON:DXNS) immediately. A measure of debt on a cash to profit basis doesn't make them look too bad for them at first flush, though. Still, if you're going to choose a magic formula stock,…
