On Jan 23, 2015, Zacks Investment Research upgraded J. C. Penney Company, Inc. (JCP) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
J. C. Penney has been in the news ever since the company posted robust holiday sales data on Jan 6. The company revealed that comparable-store sales for the combined nine weeks of November and December were up 3.7% year over year.
Further, buoyed by strong comparable-store sales data, management now expects fourth-quarter fiscal 2014 comps to be at the higher end of its previously provided guidance of 2%-4%.
The strong holiday sales data reflects that J. C. Penney’s endeavors to recoup and give itself a major facelift are paying off, and they are not as shoddy as perceived when it reported flat comps for the third quarter of fiscal 2014 after registering growth of 6%, 6.2% and 2% in the trailing three quarters.
The company under Mike Ullman took several strategic initiatives to drive traffic and turnaround its position. It brought back promotions, initiated effective marketing campaigns and launched point-of-sale technology initiatives along with effective cost and inventory management to drive sales.
Given the strong end to the holiday season, analysts have become constructive on the stock as reflected in the narrowing of loss estimates for both fiscal 2014 and fiscal 2015. In the last 30 days, loss per share for fiscal 2014 has been narrowed to $2.52 from the earlier estimate of loss of $2.55, while loss per share for fiscal 2015 stands at $1.42 per share, narrowed from $1.47 per share estimated earlier.
Moreover, the company’s turnaround efforts have helped it to deliver positive earnings surprise in the trailing four quarters with an average beat of 13.3%.
Other Stocks to Consider
Other retailers worth considering include Target Corporation (TGT), Bebe Stores, Inc. (BEBE) and Rite Aid Corp. (RAD), all sporting a Zacks Rank #1.
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