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J C Penney Company Inc May Have Found a Bottom

JCP stock is struggling, but may have upside

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A few years ago, J C Penney Company Inc (NYSE:JCP) was effectively taken over by Pershing Square, a hedge fund managed by Bill Ackman. His goal was to completely remake the JCP experience. Regrettably, this strategy failed. After Ackman sold out, JCPenney was left swinging in the wind without any real plan. Then Amazon.com, Inc. (NASDAQ:AMZN) took over the world of retail, and JCP stock cratered even more amidst heavy competition.

JCP Stock: J C Penney Company Inc May Have Limited Downside
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JCP stock has been struggling for a while, but its recent earnings report showed a few steps forward. Let’s look at the numbers, and then look at the big picture.

The most important element for JCP stock this quarter was same-store sales, which rose 1.7%. Comps are the single biggest metric I look at as far as the health of any kind of retail company. It means that the company is either attracting more people to its stores and/or has pricing power. This 1.7% increase was an improvement over last year’s 0.8% decline. The other good news is that this wasn’t the massive single digit and double-digit comp declines JCP saw when it was at its worst.

Total sales fell 1.8% to $2.807 billion, and cost of goods increased 3.2% to $1.852 billion. However, SG&A fell 5.4% to $849 million. When we back out depreciation and restructuring costs, JCP stock had $93 million in EBIT, so it was operationally cash flow positive.

Backing out the $78 million in interest expense still leaves JCP stock with $15 million. The net loss including everything was $128 million, up from last years $67 million.

J.C. Penney ended the quarter with $185 million in cash and investments. Long term debt was paid down by almost half a billion dollars to $4.04 billion.

JCP Stock’s Plans Going Forward

So what is the company doing to elevate JCP stock price? The company’s mission statement is to “Help our customer find what she loves for less time, money, and effort.” Not a bad way to go, and I don’t ever recall JCP focusing exclusively on women.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/11/j-c-penney-company-inc-jcp-stock-downside-limited/.

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