J.C. Penney Company, Inc (NYSE:JCP) finally on dollar route?

Posted by Nathan Alexander August 22, 2013 0 Comment 749 views

At some point of Wednesday, it seemed like J.C. Penney Company, Inc. (NYSE:JCP) shares will be doing a rebound but will the company be able to follow suit? In Wednesday’s trading session, JCP dipped by 4.85%. The opening price of the shares was $13.89 which touched an intraday high of $13.95 and closed at $13.33. More than 26.75 million shares were traded on Wednesday and the average volume of shares traded over a 30 day period was 18.70. The company has a market cap of 2.94 billion.

History repeats itself

So what was behind the sudden 7% surge that the shares experienced at mid-day on Wednesday? Analysts believe that on a certain level, the company might just have reached a point where a comeback is the only way to go. It must be remembered that JCP missed its revenue and earnings estimate by a massive scale.
Revenue dropped 11.9% to $2.66B which was way below the projected $2.76B.

The earnings per share dropped to $1.17 after backing-out loss for a tax-valuation allowance. This was worse than the estimates at $1.06. A year back, when the company had almost an identically dismal quarter, it had lost only $0.37/share. Now, JC Penney has lost $5.36/share over the past 4 quarters or around $1.2B which is close to 40% of its market value.

A ray of sunshine

In the meantime, same-store sales were way off mark by a shocking 11%. However, the company’s management noted that the there has been an improvement in comparable sales sequentially over this year. The Q2 sales figures were 470 basis-points better than the Q1 figures and same store sales had also bettered themselves over the last quarter.

In a way, this seemed to give the market some hope. It finally seems like JCP may be headed towards a brighter future. The downside is that the humungous losses that have been piling up but still drag its profits into the mire.

About Nathan Alexander

Nathan Alexander holds bachelor’s degrees in Journalism and European Studies from Boston University. Nathan reports round up the day’s business and financial market news and include keynote interviews with major business players and updates on Asian, European and US stock markets. He has interviewed heads of leading European banking institutions such as European Central Bank President Jean-Claude Trichet and HSBC Chairman Stephen Green, and CEOs from the business world including Microsoft founder Bill Gates, Virgin Chairman Sir Richard Branson and former Porsche President and CEO Dr Wendelin Wiedeking.

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