Altman Z-Score, Trailing 12 Months: 2.72Altman Z-Score 2009: 2.48J.C. Penney ( JCP), of course, has given no indication that it is on the road to a Ch. 11 filing; still, it's worth noting that its Z-Score logs in below the safety zone of a score of 3. "One never knows," says Sozzi, who calls out the following characteristics that could make J.C. Penney susceptible to bankruptcy: selling mid-priced merchandise that is getting hit by competition from Kohl's ( KSS) and Macy's ( M), and the threat of online retail channels. "Taking these basic items into account, over time, one has to wonder if the company runs into trouble servicing its debt," he says. Overall, J.C. Penney has seen improvement in 2010, even though its same-store sales remain sluggish. In the first quarter the department store generated a profit of $60 million, a 140% surge from the year-ago period. J.C. Penney is unique compared to its peers in that its earnings are negatively impacted by a non-cash pension expense each quarter. The department store has a strong liquidity position, which prompted Fitch Ratings to rate the retailer as stable. The company also paid down $393 million in debt maturities due in March 2010.