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J. C. Penney (JCP) Q4 Earnings: Is Disappointment in Store?

J. C. Penney Company, Inc.JCP is slated to report fourth-quarter fiscal 2016 results on Feb 24. In the preceding quarter, the company reported narrower-than-expected loss. Notably, in the trailing four quarters the company has surpassed the Zacks Consensus Estimate, with an average surprise of 42.1%. Let's see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that J. C. Penney is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

J. C. Penney has an Earnings ESP of -3.23%, as the Most Accurate estimate stands at 60 cents, while the Zacks Consensus Estimate is pegged higher at 62 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Additionally, J. C. Penney carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

J.C. Penney Company, Inc. Holding Company Price, Consensus and EPS Surprise

J.C. Penney Company, Inc. Holding Company Price, Consensus and EPS Surprise | J.C. Penney Company, Inc. Holding Company Quote

Factors Influencing this Quarter

We are not optimistic about J. C. Penney's fourth-quarter results primarily due to dismal performance during the holiday season. The company's comparable store sales declined 0.8% during the November and December period combined. The decline was primarily due to the impact of challenging retail landscape, stiff competition from online retailers and waning store traffic. The company stated that the first three weeks of November was especially challenging. During the holiday season, the company saw robust performance from appliances, boots, outerwear, toys, fine jewelry and Sephora. However, sustained weakness in women's apparel marred the company's overall performance. In the past three months, J. C. Penney shares have plunged 27.6%. On the other hand, the Zacks categorized Retail-Regional Departmental Stores industry has declined 26% in the same time frame.

Moreover, following dismal sales in the third quarter, the company had lowered comps guidance for fiscal 2016. Management expects comps growth in the range of 1-2%, down from the previous guidance of an increase of 3-4%. The company anticipates gross margin to be flat year over year, down from the prior guidance of an increase in the range of 10-30 basis points. Adjusted earnings per share are likely to be positive in fiscal 2016. EBITDA is estimated at around $1 billion.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Burlington Stores, Inc. BURL has an Earnings ESP of +1.18% and sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

General Mills, Inc. GIS has an Earnings ESP of +1.41% and carries a Zacks Rank #3.

Best Buy Co., Inc. BBY has an Earnings ESP of +1.81% and also carries a Zacks Rank #3.

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J.C. Penney Company, Inc. Holding Company (JCP): Free Stock Analysis Report

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


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

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