The Value of JC Penney Company, Inc. (NYSE:JCP) Underpriced by 32.5%?

Saturday, 11 Nov, 2017

Investors didn't have much hope for J.C. Penney's (NYSE: JCP) third-quarter earnings report after the department store operator released a terrible financial update in late October. Shares of J.C. Penney surged after the chain store posted quarterly revenue and same-store sales growth that topped Wall Street estimates, a pleasant surprise that came after a late-October warning that its quarterly growth would be hurt by promotional activity created to shift stubborn inventory.

Only two weeks ago, Penney shares fell more than 14% after it warned its third-quarter loss would be far worse than analysts expected due to heavy discounting on its apparel lines. The Company's department stores and Website generally serve the same type of customers, its Website offers virtually the same mix of merchandise as its store assortment and other categories, and its department stores generally accept returns from sales made in stores and through its Website.

Ellison said the company had zeroed in on promotional strategies expected to improve both traffic and margins, having tested them out during the third quarter. Bank of America Corp. upgraded shares of J.C. Penney from a neutral rating to a buy rating and boosted their price objective for the stock from $9.53 to $12.00 in a report on Friday. Penney needs a decent holiday quarter.

J.C. Penney, like other department stores, has struggled to follow shoppers who have migrated online or who are now going to off-price retailers like T.J. Maxx.

Japan's Nikkei index saw a wild 2 percent swing after hitting its highest since 1992 and Europe's main indexes were firmly in the red as tech and commodity stocks tumbled and as Brexit talks resumed amid low expectations in Brussels. Liquidity allows an investor to enter and exit a stock at a good price (i.e. tight spreads, or the difference between the bid and ask price of a stock, and low slippage, or the difference between the predictable price of a trade and the actual price). Holding (NYSE:JCP) last announced its earnings results on Friday, August 11th.

Adjusted loss per share of $0.33 was better than the $0.40-$0.45 guidance. Northcoast Research lowered J.C. Penney Company, Inc. Risk management is typically on the minds of many investors. However, it is still down by about 70% from its 52-week high, reached last December.

Total sales for the quarter were down 1.8% to $2.18 billion, with company officials pointing to the closure of 139 stores as the key reason for the decline. Following the acquisition, the director now owns 518,970 shares in the company, valued at $1,889,050.80.

Shares of J.C. Penney Company, Inc.

Thus, the fourth quarter could be critical for restoring investor trust. Finally, Teachers Advisors Inc. raised its stake in J.C. Penney by 13.3% in the second quarter.

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. When investing in a volatile security, the risk of success is increased just as much as the risk of failure.

Adam Levine-Weinberg owns shares of J.C. Penney. The Motley Fool has a disclosure policy.