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What's in Store for JC Penney (JCP) this Earnings Season?
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J. C. Penney Company, Inc. is slated to report second-quarter fiscal 2016 results on Aug 12. In the previous quarter, the company reported narrower-than-expected loss. In the trailing four quarters, the company notably surpassed the Zacks Consensus Estimate, with an average surprise of 33.6%. Let’s see how things are shaping up for this announcement.
Zacks Model Shows Unlikely Earnings Beat
Our proven model does not conclusively show that J. C. Penney is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
J. C. Penney has an Earnings ESP of -13.33%, as the Most Accurate estimate stands at a loss of 17 cents, while the Zacks Consensus Estimate is pegged at a loss of 15 cents. Though J. C. Penney’s Zacks Rank #3 increases the predictive power of ESP, a negative ESP complicates our surprise prediction.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
J. C. Penney has taken up several strategic initiatives to drive traffic. The company has been focusing on deeper penetration of private brands, omni-channel capabilities, refurbishment of stores, and expansion of the Sephora locations to fuel a strong turnaround. During the first-quarter earnings conference call, the company said that rollout of Sephora, Center Core refresh, rebranded salon, and appliances will bolster the traffic higher.
On the flip side, J. C. Penney faces stiff competition from other department stores, discounters, home furnishing stores, specialty retailers, wholesale clubs, and direct-to-consumer businesses on attributes, such as merchandise assortment, price, quality, location, and credit facility. This may affect the company’s top- and bottom-line results. Its higher debt level is also a major concern. Although J.C. Penney lowered its debt significantly during first-quarter fiscal 2016, its debt levels still remain high. At the end of the reported quarter, total long-term debt was $4,388 million, reflecting debt-to-capitalization ratio of 77.8%.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Macy's, Inc. (M - Free Report) currently has an Earnings ESP of +25% and a Zacks Rank #2 (Buy).
The Children's Place, Inc. (PLCE - Free Report) currently has an Earnings ESP of +25% and a Zacks Rank #2.
The Gap Inc. (GPS - Free Report) currently has an Earnings ESP of +2.13% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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What's in Store for JC Penney (JCP) this Earnings Season?
J. C. Penney Company, Inc. is slated to report second-quarter fiscal 2016 results on Aug 12. In the previous quarter, the company reported narrower-than-expected loss. In the trailing four quarters, the company notably surpassed the Zacks Consensus Estimate, with an average surprise of 33.6%. Let’s see how things are shaping up for this announcement.
Zacks Model Shows Unlikely Earnings Beat
Our proven model does not conclusively show that J. C. Penney is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
J. C. Penney has an Earnings ESP of -13.33%, as the Most Accurate estimate stands at a loss of 17 cents, while the Zacks Consensus Estimate is pegged at a loss of 15 cents. Though J. C. Penney’s Zacks Rank #3 increases the predictive power of ESP, a negative ESP complicates our surprise prediction.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
PENNEY (JC) INC Price and EPS Surprise
PENNEY (JC) INC Price and EPS Surprise | PENNEY (JC) INC Quote
Factors Influencing this Quarter
J. C. Penney has taken up several strategic initiatives to drive traffic. The company has been focusing on deeper penetration of private brands, omni-channel capabilities, refurbishment of stores, and expansion of the Sephora locations to fuel a strong turnaround. During the first-quarter earnings conference call, the company said that rollout of Sephora, Center Core refresh, rebranded salon, and appliances will bolster the traffic higher.
On the flip side, J. C. Penney faces stiff competition from other department stores, discounters, home furnishing stores, specialty retailers, wholesale clubs, and direct-to-consumer businesses on attributes, such as merchandise assortment, price, quality, location, and credit facility. This may affect the company’s top- and bottom-line results. Its higher debt level is also a major concern. Although J.C. Penney lowered its debt significantly during first-quarter fiscal 2016, its debt levels still remain high. At the end of the reported quarter, total long-term debt was $4,388 million, reflecting debt-to-capitalization ratio of 77.8%.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Macy's, Inc. (M - Free Report) currently has an Earnings ESP of +25% and a Zacks Rank #2 (Buy).
The Children's Place, Inc. (PLCE - Free Report) currently has an Earnings ESP of +25% and a Zacks Rank #2.
The Gap Inc. (GPS - Free Report) currently has an Earnings ESP of +2.13% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>