J C Penney Company Inc (NYSE:JCP) investors were wildly disappointed today after the retail giant reported first-quarter net sales of $2.71 billion, missing consensus estimate of $2.77 billion. However, despite the weaker top-line, the company did manage to increase its gross margin year over year by 10 basis points to 36.3%, and generated adjusted earnings per share of $0.06, beating consensus estimate of $0.21 per share loss. JCP shares closed today at $4.55, down $0.74 or -14%.
Oppenheimer analyst Brian Nagel commented, “Overall, as we examine results reported by JCP, we come away with the view that the report “could have been worse,” given very weak trends announced by others in the department store category lately. Adjusted EPS at JCP in Q1 improved to $0.06 from a loss of $0.32 last year. Comp sales declined a disappointing 3.5% in the period (we modeled down 1% or so), but management indicated clearly that top-line trends improved markedly in Mar. and Apr., following a decidedly weak Feb.”
“As we have indicated previously, we look very favorably upon the improved operating disciplines of JCP under the guidance of new CEO Marvin Ellison. Our hesitation in recommending the shares is simply the very challenged sector in which JCP operates, and our view that consumer malaise is apt to persist,” the analyst added.
The analyst reiterates a Perform rating on JCP, without suggesting a price target.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian Nagel has a yearly average return of 1.4% and a 50% success rate. Nagel has a -32% average return when recommending JCP, and is ranked #1778 out of 4560 analysts.
Out of the 15 analysts polled by TipRanks (in the past 12 months), 4 rate J.C Penney stock a Buy, 10 rate the stock a Hold and 1 recommends to Sell. With a return potential of 66%, the stock’s consensus target price stands at $7.56.