J.C. Penney Company, Inc. (JCP): What’s Next?

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J.C. Penney Company, Inc. (NYSE:JCP)On Thursday, J.C. Penney Company, Inc. (NYSE:JCP) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Penney has been trying to engineer a turnaround in its struggling retail business for some time. Yet recently, the company finally gave up on its newest strategy, replacing departing CEO Ron Johnson with former leader Mike Ullman. Let’s take an early look at what’s been happening with J.C. Penney Company, Inc. (NYSE:JCP) over the past quarter and what we’re likely to see in its quarterly report.

Stats on J.C. Penney

Analyst EPS Estimate ($0.86)
Year-Ago EPS ($0.25)
Revenue Estimate $2.72 billion
Change From Year-Ago Revenue (13.7%)
Earnings Beats in Past 4 Quarters 0

Source: Yahoo! Finance.

Can J.C. Penney finally turn around now?
Analysts have completely lost confidence in J.C. Penney Company, Inc. (NYSE:JCP)’s future over the past several months, tripling their loss estimates for the most-recent quarter and reducing their earnings-per-share consensus for fiscal 2014 and 2015 by more than almost $2.50 each. The stock has fallen 6% since early February but has recovered from much worse levels In recent months, analysts have scaled back their views on J.C. Penney Company, Inc. (NYSE:JCP)’s earnings somewhat, widening their loss estimates for the first by a penny per share and cutting full-year 2013 earnings projections by $0.04 per share. But they’ve gotten more optimistic about J.C. Penney Company, Inc. (NYSE:JCP)’s prospects in 2014, and that longer-term optimism has helped push the stock up about 10% since early February.

Penney has already warned investors that its coming quarterly results will be ugly. In a preview last week, the retailer said that same-store sales would drop 16.6%, due largely to the construction work that has been ongoing in more than 500 locations across the country.

Yet in many ways, what J.C. Penney Company, Inc. (NYSE:JCP)’s performance looks like in this report is already irrelevant, given the departure of former CEO Ron Johnson. Now, investors face a situation in which Penney has already backtracked on its attempts to eliminate coupons and discounts, apologizing in a massive advertising campaign for what it now claims to see as missteps in its attempt to transform itself. Yet while memories on Wall Street are short, they’re not so short as to forget that new CEO Mike Ullman was Johnson’s predecessor and played a role in getting Penney into the problems that necessitated Johnson’s turnaround attempt in the first place.

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