J. C. Penney Company, Inc.
) gathered momentum and surged 8.8% to close at $7.39 yesterday,
after CEO Myron Ullman hinted at improving sales trends and
reiterated positive comparable-store sales forecast for the third
quarter of fiscal 2013, Associated Press reported.
Earlier, J. C. Penney had revealed that its key sales
barometer improved in September from the prior month and is
expected to last through the remainder of 2013, owing to its
turnaround efforts. The Plano, Texas-based retailer had announced
that its sales for the month of Sep 2013 dipped 4% year over year
but improved sequentially from a decline of 9.8% registered in
J. C. Penney has been in troubled waters for quite some time,
and has been grappling with waning revenues and higher losses.
The company has not shown any signs of recovery in the recent
past. This is evident from its 7th consecutive quarter of
sluggish results on Aug 20. The company has been constantly
lagging its peers,
) in terms of performance.
However, the company has taken several strategic initiatives
to drive traffic and conversion. The company reverted to
promotions, which could be a successful sales driver this holiday
Investors remain cautious about the stock, as the company
endeavors to recoup and give itself a major facelift. In a
significant development, the company's board of directors in Apr
2013 discharged the Chief Executive Officer (CEO) Ron Johnson of
his duties after 17 months, as his ambitious transformational
ideas failed to materialize. Consequently, the company's former
CEO, Myron Ullman was reinstated in his post.
The company will come out with its third quarter results on
Nov 19. However, our proven model does not conclusively show that
J. C. Penney is likely to beat earnings this quarter. This is
because a stock needs to have both - a positive
and a Zacks Rank #1, #2 or #3 to beat the estimate - but this is
not the case here. Although the stock carries a Zacks Rank #3
(Hold), but has a negative ESP of 12.12% (as the Most Accurate
estimate stands at a loss of $1.85, while the Zacks Consensus
Estimate is pegged at a loss of $1.65).
The above view is well supported by J. C. Penney's earnings
surprise history. Looking at the company's earnings surprise
history, it has missed the Zacks Consensus Estimate by an average
of about 523.2% in the trailing four quarters.
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