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JCPenney’s Stock Up by 42% in 2016 as Analysts See More Upside

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Nov. 20 2020, Updated 1:32 p.m. ET

Stock up on year-to-date basis

JCPenney’s (JCP) stock price has increased by a robust 42% on a year-to-date basis, closing at $9.90 on April 18. JCPenney’s stock has outperformed its department store peers Macy’s (M), Nordstrom (JWN), and Dillard’s (DDS), which have appreciated by 13.8%, 4.4%, and 10.7%, respectively, since the start of 2016. The stock price of Kohl’s (KSS) has declined by 11% on a year-to-date basis.

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Turnaround efforts showing results

JCPenney has made considerable improvement since the company suffered a severe setback. This was mostly due to failed strategic initiatives under the leadership of the former CEO, Ron Johnson. JCPenney’s turnaround strategy has focused on restoring its private brands, closing underperforming stores, enhancing the company’s merchandise assortment, strengthening the center core categories and Sephora business, and enhancing the company’s omnichannel capabilities.

In fiscal 2015 ended January 31, 2016, the company’s sales grew by 3% and the adjusted loss per share improved to $1.03 compared to $2.67 in fiscal 2014. The company’s performance was impressive in the previous fiscal year, in which many peers like Macy’s and Kohl’s struggled due to an uncertain retail environment.

For fiscal 2016, analysts expect JCPenney’s sales to rise by 3%. Analysts expect JCPenney to post an adjusted EPS (earnings per share) of $0.11 in fiscal 2016 compared to an adjusted loss per share of $1.03 in fiscal 2015.

Analyst recommendations

Of the 26 analysts covering JCPenney’s stock, 11 analysts have a “buy” recommendation and 11 analysts have a “hold” recommendation. Four analysts have issued a “sell” rating. JCPenney’s top line has made a consistent improvement over the past few quarters. However, the company’s operating margin and earnings are still in the red.

The 12-month price target for JCPenney’s stock is $12.39, which represents a 25.2% upside potential from the current price. The SPDR S&P Retail ETF (XRT) has ~1% exposure to JCPenney.

For more updates, please visit our Department Stores page.

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