Earnings reports to watch next week: GME, LOW, CRM >>> READ MORE

It Looks Bleak For J C Penney Company Inc Stock Even If Stores Survive

Old-line retailer JCP is stuck in the last century and lacks a a reason for being in an Amazon.com era

JCP stock

Source: Shutterstock

    View All  

Plano, Texas-based J C Penney Company Inc (NYSE:JCP) finds itself at a critical juncture as it approaches its Nov. 10 earnings announcement. JCP stock has seen a 32% sell-off in the last month in anticipation.

The malls housing JCPenney stores are seeing fewer customers these days. Instead, they seeking items sold at a discount, in bulk, or online. Given this reality, JCP’s place in a retail world dominated by companies such as Wal-Mart Stores Inc (NYSE:WMT), Target Corporation (NYSE:TGT), Costco Wholesale Corporation (NASDAQ:COST), or Amazon.com, Inc. (NASDAQ:AMZN) remains unclear.

The company may find a way to save itself, but it’s seeming less and less likely that there’s salvation for JCP stock.

JCPenney Still Stuck in 1990s

recently described Rite Aid Corporation (NYSE:RAD) as company lacked a raison d’être, or a reason for being. Unfortunately for holders of JCP stock, JCPenney also appears to lack any reason to exist.­­­ The company offers no merchandise, pricing, or, delivery or service offerings that stand out in the minds of customers.

Like other mall-based retailers — think Macy’s Inc (NYSE:M) or Sears Holdings Corp (NASDAQ:SHLD) — JCP is a 20th-century retailer struggling to find its place in the 21st century. As my colleague, James Brumley pointed out, “consumers don’t want to buy what JCPenney is offering — and they don’t want to buy it the way the retailer is selling it.”

The lack of desired offerings has hit JCP stock. With the shares trading below $2.50 a piece, the market capitalization well below the $1 billion mark. That is a low value for a company with more than $12 billion a year in annual sales. However, a $4.5 billion debt burden could easily devastate a company of JCP’s size. Consequently, investors have been reluctant to pick up shares. This is despite the stock trading well below book value and a 0.06 price-to-sales (PS) ratio.

As several of my InvestorPlace colleagues point out, there is a silver lining in this embattled retailer: JCPenney is not Sears. Unlike Sears, JCP fights to stay alive. Lately, they’ve waged this battle by offering deep discounts to customers.

Next Page 


Article printed from InvestorPlace Media, https://investorplace.com/2017/11/it-looks-bleak-for-j-c-penney-stock/.

©2017 InvestorPlace Media, LLC