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

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

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

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

JCPenney 300x191 Adding Insult to Injury   JCP Stock Bounced From the S&P 500As 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:

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.

Endnotes:
  1. JCP: http://studio-5.financialcontent.com/investplace/quote?Symbol=JCP
  2. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  3. TGT: http://studio-5.financialcontent.com/investplace/quote?Symbol=TGT
  4. pointed out in early October: http://investorplace.com/2013/10/jcp-6-ridiculous-facts-jcpenney-stock/
  5. M: http://studio-5.financialcontent.com/investplace/quote?Symbol=M
  6. SHLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=SHLD
  7. JPM: http://studio-5.financialcontent.com/investplace/quote?Symbol=JPM
  8. ALLE: http://studio-5.financialcontent.com/investplace/quote?Symbol=ALLE
  9. IR: http://studio-5.financialcontent.com/investplace/quote?Symbol=IR

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