J.C. Penney Company, Inc. (JCP): Billionaire George Soros Reaches For a Falling Knife

Other department stores include Macy’s, Inc. (NYSE:M), Kohl’s Corporation (NYSE:KSS), Sears Holdings Corp (NASDAQ:SHLD), and Dillard’s, Inc. (NYSE:DDS). Sears Holdings Corp (NASDAQ:SHLD) is the only one of these peers which is also unprofitable; it too has seen a decline in revenues though a much smaller one than at J.C. Penney, and it too is a popular short target with 33% of its float held short. The other three companies are valued between 12 and 14 times their trailing earnings, which would at least put them close to value territory assuming that they could buck what we are seeing at the other two retailers and grow their earnings. Each of these three managed an increase in revenue in their most recent quarter versus a year earlier, though only Dillard’s, Inc. (NYSE:DDS) translated that into growth on the bottom line. That department store trades at 11 times forward earnings estimates, suggesting that the sell-side is expecting essentially flat numbers going forward, but we still think that it is worth a look.

Soros’s move into J.C. Penney is somewhat interesting, but the large operating loss and the shrinking sales numbers are enough to keep us away from the retailer; it seems speculative to assume that the business will improve over its performance in the last year. Dillard’s seems like a better value prospect at this time, and investors who are interested in department stores might want to do more research there instead.

Disclosure: I own no shares of any stocks mentioned in this article.