The Q1 2014 earnings report for troubled J.C. Penney Company, Inc (NYSE: JCP), a peer of other department store stocks like Kohl's Corporation (NYSE: KSS), The Bon-Ton Stores, Inc (NASDAQ: BONT) and Nordstrom, Inc (NYSE: JWN), is scheduled for after the market closes on Thursday. Aside from the J.C. Penney Company's earnings report, it should be said that Kohl's Corporation will report Q1 2014 when the market opens on Thursday; Nordstrom will report earnings after the market closes on Thursday; and The Bon-Ton Stores will report Q1 2014 earnings on Thursday, May 22nd before the market opens. However, all eyes will be on the J.C. Penney Company earnings report to see if there are any signs the company has turned itself around from the ill-fated leadership of CEO Ron Johnson – who ironically was also trying to turn things around…
What Should You Watch Out for With the J.C. Penney Company, Inc Earnings Report?First, here is a quick recap of J.C. Penney Company's recent earnings history from Yahoo! Finance:
| EPS Est | -0.89 | -1.06 | -1.77 | -0.85 |
| EPS Actual | -1.38 | -2.20 | -1.85 | -0.76 |
| Difference | -0.49 | -1.14 | -0.08 | 0.09 |
| Surprise % | -55.10% | -107.50% | -4.50% | 10.60% |
In late February, J.C. Penney Company reported better than expected results, including improved sales and profit margins for the holiday season quarter, that sent the shorts scrambling for cover. The CEO also commented:
"With the most challenging and expensive parts of the turnaround behind us, we will focus on improving gross margin, managing expense and steadily growing our sales in 2014."
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In light of the company's change in strategy, Standard & Poors upgraded its outlook on the company to Stable from Negative – saying its liquidity appears to be adequate and that it is unlikely to default over the next year. They added that the retailer's results showed "modest improvement," while its merchandise is now more in-line with the company's "traditional core customer" – hence they feel performance is likely to improve modestly this year.
This time around and according to the Yahoo! Finance analyst estimates page, the consensus expects $2.71 billion in revenues and EPS of -$1.25 - worst than the EPS of -$1.15 expected ninety days ago. The consensus also remains skeptical of the stock, which has 15 analysts saying it's a Hold and 6 rating it as Underperform while 3 say Buy and 1 says a Strong Buy.
However, the shorts are optimistic about a payday because the stock is the 23rd most shorted stock on the NYSE with short interest of 30.07% according to HighShortInterest.com. It could be worst though because retailer RadioShack Corporation (NYSE: RSH) has short interest of 35.49% while hhgregg, Inc (NYSE: HGG) has short interest of 53.77%.
What do the J.C. Penney Company, Inc Charts Say?The latest technical chart for J.C. Penney Company does show one optimistic trend line:
A look at the performance charts shows a steady long term performance for both Kohl's Corporation and Nordstrom along with a volatile performance for The Bon-Ton Stores and the disastrous performance of J.C. Penney Company under Ron Johnson's reign:
The latest technical chart for Kohl's Corporation shows a double top while The Bon-Ton Stores has remained volatile and Nordstrom's shows some bullishness:
Before you make any kind of move on J.C. Penney Company, I'd try to go into a few of their stores to see what kind of merchandise they have and who is looking at it. In Ron Johnson's defense, he did try to make the store appeal to the younger and more hipper crowd, but instead managed to alienate older women who tended to be the store's most loyal customers. If the older women are back, then perhaps things are at least back to where they were before Johnson took over. But that's not exactly a great place to be nor a solid enough foundation for long term investors.
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