J.C. Penney (JCP) Stock Rises Despite Citigroup's Bearish Sentiment
NEW YORK (TheStreet) -- J.C. Penney Co. (JCP) - Get Report shares are increasing 1.08% to $7.52 on Monday even though Citigroup analysts said that the department store chain will likely face challenges heading into the holidays.
Despite reporting strong third quarter 2015 results that topped analysts' profit and revenue forecasts last Friday, analysts said management did not raise FCF guidance.
It appears that long term, it will be hard for J.C. Penney to reach their goal of $1.2 billion 2017 EBITDA, analysts said.
Overall, the company is in a tough spot, the firm noted, according to Barron's.com.
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.
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