What to Expect When J.C. Penney (JCP) Reports Third Quarter Earnings Results

NEW YORK (TheStreet) -- J.C. Penney Co. Inc. (JCP) is scheduled to report its third quarter 2014 earnings results after the market close on Wednesday, and analysts are expecting the company's net loss to narrow, and its revenue to rise for the most recent quarter.

Analysts polled by FactSet are anticipating that the department store to post a narrowed net loss of 81 cents per share, compared to the adjusted net loss of $1.81 per share, the company reported for the 2013 third quarter.

Net sales are forecast to grow to $2.81 billion for the latest quarter versus $2.78 billion for last year's third quarter.

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Shares of J.C. Penney are down by 1.11% to $7.14 in late afternoon trading on Tuesday.

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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 some concerns, 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 generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio is very high at 2.09 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • In its most recent trading session, JCP has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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.
  • PENNEY (J C) CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PENNEY (J C) CO reported poor results of -$6.07 versus -$4.49 in the prior year. This year, the market expects an improvement in earnings (-$2.56 versus -$6.07).
  • 36.01% 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 -6.14% trails the industry average.
  • You can view the full analysis from the report here: JCP Ratings Report

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