Report: Retailers may be undervalued

A new report from Deutsche Bank Securities speculates that six broadline retailers may be worth more than their share prices indicate — once their real estate holdings are taken into account. The firm's most interesting finding: that Kmart shares could be worth as much as $150 per share when its net asset value is considered. The report, "Gold in Them Thar Retailers," also found Home Depot and Lowe's real estate "could be a significant source of capital." Other companies trading below net asset value included ShopKo, Dillards, Saks Inc., Sears, Federated Department Stores, Winn-Dixie and Toys "R" Us. The report concluded that of the retail categories, "the department stores are the mother lode of real estate value. For years, the department stores got free land and generous build-out allowances from shopping center developers." Deutsche Bank analyzed 38 retailers. Those whose shares are trading above their high net asset value, the report stated, include Wal-Mart, Kohl's, Target, Costco, Nordstrom, Neiman Marcus, BJ's Wholesale, J.C. Penney and The May Co.