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Will J. C. Penney (JCP) Turnaround Efforts Drive Q2 Earnings? - Analyst Blog

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We expect department store retailer J. C. Penney Company, Inc. ( JCP ) to beat expectations when it reports second-quarter fiscal 2014 results on Aug 14. In the last quarter, it posted a positive surprise of 8.7%.

Why a Likely Positive Surprise?

Our proven model shows that J. C. Penney is likely to beat earnings estimate this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 or 2 or 3 for this to happen. J. C. Penney has the right combination of these two key components.

Zacks ESP: J. C. Penney currently has an Earnings ESP of +14.14%. This is because the Most Accurate estimate stands at a loss of 85 cents, while the Zacks Consensus Estimate is pegged at a loss of 99 cents.

Zacks Rank: The company carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating estimates. The Sell-rated stocks (Rank #4 and 5) should never be considered going into an earnings announcement.

What is Driving Better-than-Expected Earnings?

J. C. Penney has taken several strategic initiatives to drive traffic and conversion. The company brought back promotions, which we perceive could be a successful sales driver. We believe J. C. Penney's well diversified supplier base, compelling national and private-label brands, effective marketing campaigns, point-of-sale technology initiatives as well as effective cost and inventory management would drive sales and margin trends over the long term. The company is trying every possible way to uplift itself in order to deliver comparable-store sales growth and boost market share.

In the trailing three quarters, J. C. Penney has outperformed the Zacks Consensus Estimate by 8.6%, 13.9% and 2.7% respectively.

Stocks that Warrant a Look

J. C. Penney is not the only firm looking up this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter:

Chipotle Mexican Grill, Inc. ( CMG ) has an Earnings ESP of +0.79% and a Zacks Rank #1 (Strong Buy).

Abercrombie & Fitch Co. ( ANF ) has an Earnings ESP of +20.00% and a Zacks Rank #3 (Hold).

GameStop Corp. ( GME ) has an Earnings ESP of +10.53% and a Zacks Rank #3.

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

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GAMESTOP CORP (GME): 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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