Earlier this month, beleaguered department store J C Penney Company Inc (NYSE:JCP) surprised investors with the release of its third-quarter earnings. The results helped JCP stock rise a stunning 24% over the previous five days as investors cheered the fact that same-store sales rose 1.7% from the previous year.

Good News for JCP Stock?

Most, including myself, had been expecting to see comps slide yet again in the third quarter. So the marked increase was certainly a pleasant surprise for investors. Unfortunately the good news — if you can call it that — ended there. JCP still saw revenue drop 1.8% from Q3 in 2016 and the company’s gross margin lost 320 basis points.

You can’t blame the market for cheering JCP’s impressive comps. On first glance, they looked pretty impressive. Although there’s a chance that they signify a turn-around for JCP stock price, I’m still not convinced.

One reason that the comps figure doesn’t do it for me is the fact that much of the rise was from deep discounting in order to move merchandise that’s been gathering dust on the shelves. CEO Marvin Ellison admitted as much during the earnings call.

So, a lot of that 1.7% increase came from a one-time sale. It’s hard to trust that this is the beginning of a positive trend for JCP.

JCP Stock Guidance

The other reason you can’t trust JCP stock’s recent rally is that days before the Q3 earnings beat, JCPenney management released some pretty dismal forward guidance. At the end of October, just a few days before the Q3 results, JCP management significantly cut both its third-quarter and its full-year guidance in an effort to manage expectations. The news hit JCP stock hard. And the Q3 beat was considered a victory.

During the Q3 earnings call, management said it was sticking to the full-year expectations. Those had been laid out in the October guidance, and suggests the fourth quarter isn’t likely to dazzle.

On one hand, I’m glad to see management reeling in its expectations and keeping things conservative. On the other hand, I’m not sure that JCP will be able to pull off another earnings beat come the end of Q4.

JCP’s Many Issues

It’s a cold hard world for retailers in the U.S. right now. JCPenney is very unprepared to weather this storm. The company is struggling financially. And the firm’s location, in middle-class shopping malls, is pretty much as bad as it can get. People simply aren’t going to malls anymore, so driving traffic to JCPenney locations is becoming harder and harder.

I don’t dislike Ellison’s efforts. He’s been closing down the least profitable locations in order to pay down debt, increasing the company’s online presence and focusing his efforts on brands and offerings that are the most popular among JCP customers. But I think the store is still nearing its end.

Look at some of JCP’s initiatives. It’s building its in-store Sephora boutiques, expanding its appliance offerings, and bringing Nike Inc. (NYSE:NKE) outlets to its locations. They don’t look that compelling. Customers can get the majority of those things online or at other stores. Is it enough to bring customers to a JCP location? Probably not.

The Bull Case for JCP Stock

JCP stock might appeal to strong-stomached investors who believe that Ellison’s turn-around plans will work. The company is certainly giving it a go, something that can’t be said for companies like Sears Holdings Corp (NASDAQ:SHLD), which appears to be simply dragging out its eventual death.

JCPenney is actually trying to survive, and it’s possible that the firm might make it once it has closed down many of its locations, paid off debt and streamlined operations. There’s also a chance that JCP will be acquired — the best case scenario would be Amazon.com, Inc. (NASDAQ:AMZN) stepping in, but that situation is highly unlikely. More likely, as Dana Blankenhorn pointed out, would be a private equity firm buying the company and taking tax losses.

The Bottom Line on JCP Stock

I commend Ellison and truly believe he’s doing everything he can to revive JCPenney stores. However, I think there are too many holes to plug. Every time he solves a problem, a new one materializes because JCP simply wasn’t prepared for the massive shift that the retail sector has seen. If you’ve got a strong stomach for risk and some cash to burn, buying JCP stock could eventually pay off if the company gets acquired or Ellison’s plans do eventually take shape.

However, adding JCP to your portfolio is pure speculation and that means you might be better off taking your cash to a casino.

As of this writing, Laura Hoy was long AMZN.