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JC Penney Upped to Strong Buy on Strategic Initiatives - Analyst Blog

Zacks Equity Research
Updated

On Jul 14, 2015, Zacks Investment Research upgraded J. C. Penney Company, Inc. JCP to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

J. C. Penney has been witnessing rising earnings estimates as CEO designee Marvin Ellison continues to give investors a strong assurance about the company’s turnaround initiatives.

Ellison stated that the company has a massive upside potential as the company’s slump was not due to poor economic backdrop or tough competition but resulted from a failed set of strategic initiatives.

Ellison, who will take over current CEO Mike Ullman in August, has been sharing responsibilities with the latter since last October, when he was announced the next CEO.

To lift the company’s performance, Ellison has been focusing on improving the high margin center core at its stores that houses Sephora, handbag, shoes and fashion jewelry departments. The company is also overhauling its shoe department to bring in more female customers.

Further, developing omni-channel capacities remains a top priority for the company. J.C. Penney intends to integrate all its stores with its website. It also plans to launch buy online ship-to-store, buy online return-to-store, buy online shipped from store and buy online pickup same-day services in all stores within 2016. Most of its capital expenditure would be directed toward setting up huge distribution centers at strategic locations to speed up deliveries.

Moreover, the company plans to revamp the home category. Ellison has reiterated the guidance of achieving the targeted $1.2 billion EBITDA by 2017.  

The Zacks Consensus Estimate for fiscal 2015 has narrowed by 8 cents to a loss of $1.30 per share while for fiscal 2016 it narrowed by a 4 cents to a loss of 63 cents per share over the last 60 days.
 
Other Stocks to Consider

Other stocks in the apparel sector that are worth considering include Perry Ellis International Inc. PERY, Guess Inc. GES and Oxford Industries Inc. OXM. While Perry Ellis International and Guess Inc. sport a Zacks Rank #1, Oxford Industries carries a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
PENNEY (JC) INC (JCP): Free Stock Analysis Report
 
GUESS INC (GES): Free Stock Analysis Report
 
PERRY ELLIS INT (PERY): Free Stock Analysis Report
 
OXFORD INDS INC (OXM): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research