J.C. Penney (JCP) Stock Rises Ahead of Earnings Report
NEW YORK (TheStreet) -- J.C. Penney (JCP) - Get Report stock is up ahead of the company's 2015 third quarter earnings results before the market open on Friday.
While announcing the $50 million settlement of a false advertising class action lawsuit in California, J.C. Penney said today that its sames-store sales and earnings exceeded expectations.
"Despite the financial impact of the settlement, the majority of which was accrued prior to the third quarter, we are pleased with our third quarter results, including a comparable store sales increase of 6.4% and gross margin and earnings performance that exceeded our expectations," CEO Marvin Ellison said in a statement.
Analysts surveyed by Thomson Reuters are expecting the Plano, TX-based retailer to report a loss of 56 cents per share on revenue of $2.87 billion.
J.C. Penney reported a loss of 62 cents per share on revenue of $2.76 billion in the third quarter of 2014.
Shares of J.C. Penney are up 5.82% to $9.18 in pre-market trading on Wednesday.
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.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 3.19 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.41, which clearly demonstrates the inability to cover short-term cash needs.
- Net operating cash flow has significantly decreased to $42.00 million or 69.34% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Multiline Retail industry average, but is greater than that of the S&P 500. The net income increased by 19.8% when compared to the same quarter one year prior, going from -$172.00 million to -$138.00 million.
- 37.04% is the gross profit margin for PENNEY (J C) CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.80% trails the industry average.
- You can view the full analysis from the report here: JCP
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.