J.C. Penney Stock Plunged Last Year; the Outlook Doesn’t Support the Upside Trend

J.C. Penney

J.C. Penney Company (NYSE:JCP) shares were among the worst performers in the last couple of years; JCP stock lost 39% value in the last twelve months, extending the five-year selloff to 76%. It is an omnichannel retailer, selling merchandise and services to consumers through department stores. The downtrend in JCP stock was supported by unstable revenues, lower margins, and big losses.

J.C. Penney Company shares are currently trading around $3.5, slightly above from the 52-week low of $2.5. JPC stock has the 52-week trading range of $2.5 to $6 per share – with the market capitalization of $1.22 billion.

Strong Numbers for Fourth Quarter and Fiscal 2017

The company’s latest financial numbers showed a modest improvement. The company generated comparable sales growth of 2.6% in the fourth quarter, supported by growth in Home, Jewelry, Footwear, Sephora and Handbags products. Its earnings of $0.81 per share increased sharply from $0.61 per share in the year-ago period – the enhancement was only due to the positive impact of tax reforms.

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The cash generation and liquidity position stabilized in fiscal 2017. The company ended the year with cash and cash equivalents of $458 million and its liquidity were standing over $2.3 billion.

The company had also lowered the debt by $600 million last year. The strong internal cash generation potential strengthens JPC position for investment in growth opportunities along with debt reduction initiatives.

Outlook isn’t Compelling  

After a solid performance in the fourth quarter and fiscal 2017, the outlook for its future fundamentals is bleak. The company expects its comparable sales to remain flat with FY2018; Adjusted earnings are likely to fall in the range of $0.05, down from the past year number of $0.22 per share.

Ellison said, “In 2018, we will intensify our market share efforts in Appliances, Mattresses, and Furniture while continuing to take steps to modernize our apparel assortment and omnichannel.  Our strategy and plan are clear and consistent, and we remain focused on two critical factors – to operate the business for growth and deliver profitable earnings.”

The lower than expected outlook for financial number weighed on trader’s sentiments; the stock dipped sharply in the last two days.

Featured Image: Depositphotos/© jetcityimage2

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