It is the right time to add J. C. Penney Company, Inc. (JCP) to your portfolio, if you haven’t already, as the stock looks promising now with its underlying factors capable of carrying the momentum further. The stock holds a Zacks Rank #2 (Buy) and has surged 20.4% year to date. We believe the stock could prove to be a solid bet for investors.
J. C. Penney’ primary strength is its earnings surprise history. The company had outperformed the Zacks Consensus Estimate in the past 4 quarters. This departmental retailer has topped the estimate by an average of 12.2%, and delivered a whopping surprise of 23.5% in the second quarter of fiscal 2014.
The stock has jumped roughly 10% since the announcement of its second-quarter results on Aug 14 that again beat estimates. J. C. Penney’s turnaround strategies seem to have paid off yet again, as the adjusted loss of 75 cents a share not only narrowed substantially from a loss of $2.16 in the last year quarter, but also fared better than the Zacks Consensus Estimate of a loss of 98 cents.
Total net sales grew 5.1% year over year to $2,799 million surpassing the Zacks Consensus Estimate of $2,786 million. Also, comparable-store sales increased 6% year over year. Online sales through jcp.com advanced 16.7% to $249 million.
The better-than-expected results have triggered an uptrend in the Zacks Consensus Estimate, as analysts are now more constructive on the stock’s future performance. In the past 30 days, the estimate for fiscal 2014 has narrowed to a loss of $2.44 from $2.96. For fiscal 2015, the estimate has improved from a loss of $1.64 to a loss of $1.28 over the same time frame.
We believe J. C. Penney’s well diversified supplier base, compelling national and private-label brands, effective marketing campaigns, point-of-sale technology initiatives as well as effective cost and inventory management should drive sales and margins over the long term. The company is trying every means to uplift itself in order to deliver comparable-store sales growth and boost market share.
Other Stocks to Consider
Other stocks worth considering in the retail sector include Citi Trends, Inc. (CTRN) and The Men's Wearhouse, Inc. (MW) sporting a Zacks Rank #1 (Strong Buy), as well as Zumiez, Inc. (ZUMZ) with a Zacks Rank #2 (Buy).
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