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JC Penney (JCP) Hits 52-Week High: Are Investors Watching?

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Shares of J. C. Penney Company, Inc.JCP touched a 52-week high of $10.09 yesterday, before eventually closing trading at $9.79. The company's shares have gained more than 51% this year. Let's delve deeper.

Shares Gains on Plan to Cut Pension

J. C. Penney's shares have gained 5.6% in the previous two trading sessions after the company announced its plan to considerably decrease its $56 billion pension obligation by 25-35%.

The company has sealed a deal with The Prudential Insurance Company of America ("Prudential") to hand over a part of its obligations and assets to the latter. J. C. Penney will buy a group annuity contract which will settle a large portion of its remaining retiree pension responsibilities. The transfer would leave the rest of the pension plan overfunded. The annuity transaction will be closed in December.

Strategic Initiatives Providing Impetus

J. C. Penney has taken up several strategic initiatives to drive traffic. The company, in order to enhance customer shopping experience, has been focusing on remodeling, renovating and refurbishing its stores with special focus on improving the high-margin center core department that houses handbags, fashion accessories, sunglasses and fashion jewelry. It is also overhauling its shoe department to bring in more female customers.

We believe J. C. Penney's promotional strategies could be a successful sales driver in the upcoming holiday season. Moreover, we perceive the company's efforts to further the reach of national as well as private-label brands, through effective marketing campaigns and point-of-sale technology should help augment its top-line performance. The company has also made investments to boost supply chain efficiency.

Upward Estimate Revisions

The company has surpassed the Zacks Consensus Estimate in the previous two quarters. Following the company's narrower-than-expected second-quarter 2015 loss, its estimates have been moving upward. In the past 60 days, the Zacks Consensus Estimate for 2015 has come down to a loss of $1.28 from a loss of $1.30. For 2016, the Zacks Consensus Estimate of a loss has narrowed by 27% to 46 cents per share.

Zacks Rank

J.C. Penny currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in this sector include Foot Locker, Inc. FL , Express Inc. EXPR and American Eagle Outfitters, Inc. AEO . Foot Locker and Express currently has a Zacks Rank #1 (Strong Buy), whereas American Eagle Outfitters holds a Zacks Rank #2 (Buy).

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PENNEY (JC) INC (JCP): Free Stock Analysis Report

AMER EAGLE OUTF (AEO): Free Stock Analysis Report

FOOT LOCKER INC (FL): Free Stock Analysis Report

EXPRESS INC (EXPR): 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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