1-Star Stocks Poised to Plunge: J.C. Penney?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, department-store operator J.C. Penney (NYS: JCP) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at J.C. Penney's business and see what CAPS investors are saying about the stock right now.
J.C. Penney facts
Headquarters (Founded) | Plano, Texas (1902) |
Market Cap | $5.8 billion |
Industry | Department stores |
Trailing-12-Month Revenue | $16.5 billion |
Management | CEO Ronald Johnson |
Return on Equity (Average, Past 3 Years) | 1.8% |
Cash/Debt | $839.0 million / $3.1 billion |
Competitors | Kohl's |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 29% of the 805 members who have rated J.C. Penney believe the stock will underperform the S&P 500 going forward.
Earlier this week, one of those Fools, starz188, highlighted J.C. Penney's most recent quarter as particularly worrisome:
There were heaps of expectations surrounding Ron Johnson as the new CEO, and he brought in some massive, massive overhauls.
So what happened? Total sales fell 20%. Same-store sales fell 19%. Gross margin slid 290 basis points. Dividend now suspended.
Meanwhile, direct competitor Macy's posted a 38% lift in Q1 earnings. They're eating [J.C. Penney's] lunch.
Johnson's plan to get rid of all promotional pricing and set everyday low pricing is an interesting bet, and according to the filing, they're continuing to move ahead with the roll-out. However I don't see investors supporting the vision for too much longer if they continue to post numbers like these.
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At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.
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