To say Thursday’s earnings report from JCPenney (JCP) is an important one would be an understatement. JCPenney earnings results for the second quarter could be the one to either deliver a death blow to JCP stock, or allow nervous investors to breathe a sigh of relief once and for all.
The recent lack of movement from stock suggests investors are on hold, waiting for some kind of sign — any sign — of what to expect going forward.
However, with weeks of pent-up trading ready to be unleashed in a couple of days, the JCPenney earnings announcement could be quite a catalytic one for JCP stock.
JCPenney Earnings Expectations
As of the latest look, JCPenney is expected to post a loss of 93 cents per share of JCP stock for the second quarter of its current fiscal year. That’s bad … but it is significant progress compared to the loss of $2.20 per share for the same quarter a year earlier.
The upcoming JCPenney earnings report is also expected to indicate a 4.5% improvement in Q2 revenue, growing from $2.66 billion in the second quarter of last year to $2.78 billion this time around.
For the record, the retailer has topped earnings estimates in each of its past two quarters, and topped revenue estimates in its most recently reported quarter.
This latest JCPenney earnings report will mark the fourth quarter back under the leadership of Myron “Mike” Ullman, who took the helm again after Ron Johnson’s exit as CEO in April 2013. Investors gave him and some new top people a couple of quarters simply to stop the bleeding started by Johnson, then gave the company a little more time to put together an effective turnaround plan. Beginning somewhat with the second quarter’s numbers, though — and even more so with the current quarter — the bar is going to be raised now that the turnaround effort should be well underway.
In that light, while the JCPenney earnings announcement for Q2 might be interesting, what is apt to be of more interest to current and would-be owners of JCP stock is the company’s guidance.
The pros predict this fiscal year’s per-share loss of $2.77 will shrink to a loss of only $1.35 next year. The experts also believe JCPenney is going to grow revenue by 4.4% next year after improving it by 4.7% in the current fiscal year. That would translate into revenue growth of this year’s projected $12.42 billion to $12.96 billion next year.
Equally important may be the company’s same-store sales results.
In the previous quarter, JCPenney’s same-store sales improved 6.2%, though in the fourth quarter of last year, same-store sales slumped by 7.4%. Comps are an important detail to watch for any retailer, but a particularly telling one for JCP stock holders right now. Same-store sales aren’t affected by store openings or closings, and therefore better indicate how well the company is executing at the store level.
Technical Note on JCP Stock
While the value of JCP stock was more than cut in half between early 2012 and early 2014, that downtrend was snapped in May when the stock walked its way above the falling resistance line. Although shares have been unable to move above a horizontal ceiling at $9.90 in the meantime, we have seen a few attempts.
The next bullish nudge could explosively unleash a few weeks worth of consolidation … particularly if the market finds something compelling in Thursday’s report.
The JCPenney earnings report for Q2 will be posted by the company this Thursday, after the market closes. The conference call will begin at 4:30 p.m. EST.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.