Adding Insult to Injury – JCP Stock Bounced From the S&P 500

by Alyssa Oursler | November 25, 2013 1:46 pm

JCPenney (JCP[1]) just got yet another slap in the face.

As if things weren’t bad enough for the flailing retailer (and for most JCPenney stock investors), news broke this weekend that Standard & Poor’s is booting JCP from the S&P 500 Index.

That’s because the market cap of JCPenney has been slashed dramatically, thanks to the fact that shares of JCP stock have been in near-free fall since early 2012.

While the S&P 500 is seen as the “best single gauge of the large cap U.S. equities market,” Standard & Poor’s said in a statement that JCP stock is now  “more representative of the mid cap market.”

Ouch.

JCP Stock: A Sad Story

It has been hard to look away from the JCP stock saga, which included the failed leadership of short-lived CEO Ron Johnson — a former star at Apple (AAPL[2]) and Target (TGT[3]) — and his move away from (then back to) coupons and sales. That disaster was complemented by a public battle with Bill Ackman, bankruptcy chatter and a spur-of-the-moment secondary offering, among other bad JCP press.

As I pointed out in early October[4], JCPenney had at that point lost $16.2 billion from its market cap since its 2007 peak. For perspective, that’s more than the entire market cap of rival Macy’s (M[5]), more than twice the market cap of rival Sears Holdings (SHLD[6]), more than the cost of hosting the 2012 London Olympics and nearly three times JPMorgan’s (JPM[7]) London Whale losses.

After that, JCP stock slid even further and lost even more of its market cap, finally finding a 52-week low of $6.24 on Oct. 21.

Since that low, JCP stock has gained 40%, including 3% today … and yet, JCPenney stock still remains down 53% year-to-date, putting its market cap at just $2.8 billion.

Besides, things might be better on a fundamental level, but they sure don’t look great. Just take a look at a few highlights from the most recent JCPenney earnings report:

• JCP posted net sales of $2.78 billion in the most recent quarter — short of analyst hopes for $2.8 billion in sales, down from $2.93 billion during an awful quarter a year ago, and an ugly 30% less than the $4 billion in sales JCPenney registered in 2011 before Ron Johnson began his destruction.
• JCPenney also posted an adjusted net loss of $1.81 per share of JCP stock for the last three months. That was worse than the already-lowered $1.72 per share analysts had slated, and was nearly double the 93 cents per share posted the year prior.

The important holiday shopping season is expected to result in a narrower loss than the one JCP suffered a year ago — but the retailer also has made a habit of missing expectations.

All in all, despite the recent upward momentum in JCPenney stock, it’s still an ugly road. The boot from the S&P 500 is just insult on top of injury for most JCP stock investors.

S&P is replacing JCPenney stock with home and business security company Allegion (ALLE[8]). ALLE stock is being spun off from Ingersoll-Rand (IR[9]). The switch will happen after the close of trading this Friday, Nov. 29.

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2013/11/jcp-stock-sp-500/

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