J.C. Penney (JCP) Stock Drops, Earnings Strong, Concern About Retail

J.C. Penney (JCP) shares are tumbling on Friday as solid quarterly earnings were overshadowed by persisting concerns about retail slowdown prompted by Macy's (M) grim outlook this week.
By U-Jin Lee ,

NEW YORK (TheStreet) -- J.C. Penney Co. (JCP) - Get Report  shares are tumbling 4.44% to $8.40 in Friday's pre-market trading session as solid quarterly earnings were overshadowed by persisting concerns about a retail slowdown, prompted by Macy's (M) grim outlook and quarterly data this week. 

For the latest quarter ended October 31, J.C. Penney lost 47 cents a share, better than analysts' expectations of a loss of 55 cents. 

Revenue of $2.9 billion beat forecasts of $2.88 billion.

In the same quarter last year, the company lost 47 cents a share on revenue of $2.76 billion.

Overall, same store sales grew 6.4% year-over-year and the company performed well in all of its merchandise divisions. 

In addition, the company raised its adjusted earnings before interest, taxes, depreciation and amortization to $645 million, up from its previous forecast of $620 million.

CEO Marvin Ellison was pleased with the latest quarterly performance and noted, "While there is significant work to do to improve our company, the J.C. Penney team remains determined to regain our status as a world-class retailer."

However, despite J.C. Penney's robust financial results and forecasts, the stock is getting pressured by several retailers warning about weak consumer spending going into the holiday season, the Wall Street Journal reports. 

This was prompted by Macy's disappointing quarterly results reported Wednesday, along with a weak earnings forecast. Profits topped estimates while sales missed.

Based in Plano, TX, J. C. Penney sells merchandise through department stores in the U.S.

Separately, TheStreet Ratings team rates PENNEY (J C) CO as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate PENNEY (J C) CO (JCP) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and weak operating cash flow.

You can view the full analysis from the report here: JCP

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