Can Investors Expect JCPenney Stock to Recover?



JCPenney stock in the red

On June 27, JCPenney (JCP) stock fell 23.7% on a YTD (year-to-date) basis. The company’s stock has declined 21.5% since the announcement of its fiscal first-quarter[1. fiscal Q1 2018 ended on May 5] results. 

JCPenney disappointed investors with a decline in its fiscal first-quarter sales. The retailer also lowered its fiscal 2018 earnings outlook due to the adoption of its new revenue recognition and pension accounting standards.

JCPenney stock declined 6.0% on May 22 following the news that the company’s CEO, Marvin Ellison, resigned to serve as CEO of Lowe’s (LOW). Ellison joined JCPenney in 2014 as president and became the company’s CEO in August 2015. Ellison implemented several measures to improve JCPenney’s performance, including focusing on categories such as beauty and home as well as closing unprofitable stores.

However, the highly competitive retail market and the growing strength of online retailers have adversely impacted JCPenney’s performance.

Stock lags its peers

JCPenney (JCP) stock has underperformed its department store peers and the S&P 500 on a YTD basis. On June 27, the YTD stock prices of Macy’s (M), Nordstrom (JWN), and Kohl’s (KSS) rose 36.0%, 50.4%, and 8.3%, respectively. The S&P 500 has risen 1.0% on a YTD basis.

Later in this series, we’ll discuss analysts’ recommendations for JCPenney stock and how much upside potential analysts foresee in the stock. Next, we’ll look at JCPenney’s growth strategies.

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