J.C. Penney Co Inc Stock Hold Recommendation Reiterated (JCP)

NEW YORK (TheStreet) -- J.C. Penney (NYSE:JCP) has been reitereated by TheStreet Ratings as a hold with a ratings score of C. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

• The debt-to-equity ratio is somewhat low, currently at 0.79, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that JCP's debt-to-equity ratio is low, the quick ratio, which is currently 0.50, displays a potential problem in covering short-term cash needs.
• 37.60% is the gross profit margin for PENNEY (J C) CO which we consider to be strong. Regardless of JCP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -5.20% trails the industry average.
• JCP, with its decline in revenue, underperformed when compared the industry average of 0.2%. Since the same quarter one year prior, revenues fell by 20.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• Net operating cash flow has significantly decreased to -$577.00 million or 1209.61% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
• Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Multiline Retail industry and the overall market, PENNEY (J C) CO's return on equity significantly trails that of both the industry average and the S&P 500.

J. C. Penney Company, Inc., through its subsidiary, J. C. Penney Corporation, Inc., operates department stores in the United States and Puerto Rico. The company sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products, and home furnishings. J.C. Penney has a market cap of $5.39 billion and is part of the services sector and retail industry. Shares are down 31% year to date as of the close of trading on Friday.

You can view the full J.C. Penney Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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• J.C. Penney Co Inc Income Statement