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|
|Trailing-12-Month Revenue||$16.5 billion|
|Management||CEO Ronald Johnson|
CFO Kenneth Hannah
|Return on Equity (Average, Past 3 Years)||1.8%|
|Cash/Debt||$839.0 million / $3.1 billion|
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.
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.
If you want to retire rich, you need to protect your portfolio from any undue risk. Luckily, we've found another retailer we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2012." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so access it now.
Want to see how well (or not so well) the stocks in this series are performing? Follow the newTrackPoisedToCAPS account.
At the time this article 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.