J.C. Penney has declined 64% to around $1.66 a share in the 17 months since our quantitative model downgraded the stock to a "Sell" from a "Hold" on May 16, 2017.
Quant Ratings evaluates thousands of stocks on a daily basis using a quantitative model that combines fundamental analysis of a firm's latest financial statements with technical analysis of a stock's price moves. You can check out Quant Ratings here.
Below is an excerpt from Quant Ratings' latest analysis of Intel:
Recently, TheStreet Quant Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Quant Ratings has this to say about the recommendation:
We rate PENNEY (J C) CO as a Sell with a ratings score of D+. 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 feeble growth in its earnings per share, unimpressive growth in net income, generally high debt management risk, weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Quant Ratings goes as follows:
PENNEY (J C) CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, PENNEY (J C) CO reported poor results of -$0.35 versus -$0.01 in the prior year. For the next year, the market is expecting a contraction of 152.8% in earnings (-$0.89 versus -$0.35).
The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Multiline Retail industry. The net income has significantly decreased by 110.4% when compared to the same quarter one year ago, falling from -$48.00 million to -$101.00 million.
The debt-to-equity ratio is very high at 3.47 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 0.09, which clearly demonstrates the inability to cover short-term cash needs.
Net operating cash flow has decreased to $219.00 million or 45.52% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 113.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
You can view the full analysis from the report here: JCP
-- Reported by Kevin Baker in Palm Beach Gardens, FL