J.C. Penney Company, Inc. (JCP): Is Now the Time to Buy?

How Does J.C. Penney Stack up against others in the retail space?

Well, it’s hard to say. Let’s look at Sears Holdings Corporation (NASDAQ:SHLD). If you recall, Sears faces a similar situation to what I was hypothesizing about J.C. Penney above. They have a ton of undervalued property on their books. (Read about it here). They also are not making any money. A big difference? Sears’ book value is just under $3 billion, while the market is selling them for $29 billion. That doesn’t look appetizing. Plus, I don’t see them doing anything to stop them from a long, slow death.

How about what I would call a slightly more upscale Macy’s, Inc (NYSE:M)? They are actually making money selling at a price-to-earnings ratio of just above 13. That seems reasonable. Plus they pay a 1.8% dividend. Not too shabby. At quick glance, Macy’s, Inc (NYSE:M) seems like potentially a reasonable investment, but it doesn’t appear to have the hidden value that I think J.C. Penney Company, Inc. (NYSE:JCP) might have. I guess higher risk, higher reward right?

And lastly, what if we compare JCP to slightly downscale Kohl’s Corporation (NYSE:KSS)? They might be even more attractive than Macy’s! Selling at a price-to earnings of just above 11, and a 3% dividend, looks like something I wouldn’t mind potentially owning. Plus that’s not even taking into account that companies like these get pretty substantial depreciation deductions ($833 million this past fiscal year), so Kohl’s Corporation (NYSE:KSS) is generating even more cash. Kohl’s Corporation (NYSE:KSS) doesn’t look like a bad company to own, but I don’t think it presents the same kind of opportunity we see with J.C. Penney Company, Inc. (NYSE:JCP).

Conclusion

My conclusion is that I don’t know whether JCP is a good investment right now. It looks interesting to me. It looks like something to look into. I am going to do more research, and maybe you should too.

The article Is Now the Time to Buy Into J.C. Penney? originally appeared on Fool.com and is written by Jared Kassan.

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