Q1 Preview: Costs Will Be in Focus as JCPenney's (JCP) Turnaround Efforts Begin to Take Hold


Shares of JCPenney ( JCP ) are bucking the broader trend Tuesday ahead of the retailer's first-quarter earnings release, due out after the market close this afternoon. While the Dow is up about 0.25 percent at last check, JCPenney shares are down 1.3 percent.

Analysts are expecting JCPenney to post a quarterly loss of 10 cents per share on sales of $3.46 billion. In the same quarter during 2011, JCPenney posted a gain of 28 cents per share on sales of $3.94 billion. The company reported a fourth-quarter 2011 loss of 41 cents per share on sales of $5.43 billion.

The retailer has beaten by an average of about 8 percent over the last six quarters. Click here to see the company's earnings history.

JCPenney shares are down nearly 22 percent over the last three months, but down just 6 percent since the beginning of 2012. The stock surged almost 19 percent on January 25th after the company unveiled a number of new initiatives .

According to data from StreetInsider.com's Ratings page, four analysts on the Street have Buy ratings on JCPenney shares, nine have Hold or Neutral ratings, and two suggest selling the stock ahead of results.

Analyst Commentary:

  • Deutsche Bank - Recently reduced its quarterly estimate from a gain of 15 cents per share to a loss of 1 cent per share. The firm is modeling for first-quarter comps to be down a sharp 14.3 percent. "While a simplified pricing strategy, new marketing approach, and uncluttered store have created alot of buzz on Wall Street - the more important question is have the changes begun to resonate with its core shopper and if not, how long will it take." Deutsche sees JCPenney backing its FY12 outlook. Traders will likely be focused on how well management reduced costs.

    Maintains Hold into the print.

  • JPMorgan - Looking for first-quarter EPS of 4 cents and a comps decline of about 16 percent. The firm believes JCPenney may be getting some traction in sales compared to last quarter and, along with a number of content changes ahead, is expecting an improved "setup." JPMorgan said, "To be clear, we do not believe JCP's issues have been fixed overnight as this turnaround requires patience, but see investor focus moving back to LT earnings power, and sequential turnaround traction, which given current sentiment and upcoming mgmt meetings represents an opportunity.

    Maintains Overweight, $49 price target.
Stay tuned to our Earnings category to see the breaking quarterly results within seconds of the official release.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: JCP



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