Tags: J.C. | Penney | holiday | JCP

J.C. Penney Profits Hang On Holiday

By    |   Tuesday, 08 Nov 2011 03:28 PM

Retailer J.C. Penney (JCP) has a historic brand name, but history means little in the very competitive retail department store sector. Year-end results, the result of holiday shopping, still drive annual profits. In that sense, investors may have trouble finding a differentiating value to separate JCP from other retail stocks.

The company owns approximately 1,100 department stores in 49 U.S. states and Puerto Rico. J.C. Penney stores carry a wide range of merchandise, with an emphasis on men, women's and children's clothing. The strategy to differentiate the J.C. Penney brand from other retailers revolves around featuring exclusive brand names such as Liz Claiborne and Modern Bride.

For the first half of 2011, revenues were flat at $7.85 billion compared to 2010. Net income per share increased to 35 cents for the six months, up from 32 cents. The bulk of the net per share increase was primarily on Penney's aggressive share buyback program. Actual net income for the six months was $78 million, up from $74 million. At the end of the second quarter, the company held $1.6 billion in cash and short term investments.

The J.C. Penney share float is 80 percent owned by institutional investors. Short term traders may be able to determine a pattern of institutional buying and selling in relation to the monthly sales numbers put out by company management.

Bulk of profits

Penney is forecast to report earnings of 11 cents per share loss for the third quarter, then a profit of $1.17 per share in the fourth quarter on holiday shopping. The fourth quarter estimated earnings are 85 percent of the full year consensus estimate of $1.38. The earnings estimate for 2012 is $2.04 per share.

Recently, the analysts at JP Morgan Stanley initiated coverage on Penney with an overweight rating. A month earlier, Deutsche Bank analysts also started covering the stock and gave JCP an initial buy rating.

The company reports next on Nov. 14.

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Retailer J.C. Penney (JCP) has a historic brand name, but history means little in the very competitive retail department store sector. Year-end results, the result of holiday shopping, still drive annual profits. In that sense, investors may have trouble finding a...
J.C.,Penney,holiday,JCP
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2011-28-08
Tuesday, 08 Nov 2011 03:28 PM
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