Will JC Penney (JCP) Miss Earnings Estimates? - Analyst Blog

J. C. Penney Company, Inc. JCP, a department store retailer, is slated to report its first-quarter fiscal 2014 results on May 15, 2014. In the last quarter, it posted a positive surprise of 13.9%. Let's see how things are shaping up for this announcement.

Factors Influencing the Quarter

J. C. Penney's endeavors to recoup and give itself a major facelift seem to be paying off well as it posted narrower-than-expected loss for the fourth quarter of fiscal 2013. We believe that although the company has brought back promotions, and is focusing on improving assortments, a better marketing strategy and the JCP Rewards program, all these will take time to bring the company back on the growth trajectory. Moreover, the soft economic recovery and erratic consumer behavior may also act as hurdles.

Earnings Whispers?

Our proven model does not conclusively show that J. C. Penney is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: ESP for J. C. Penney is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of $1.26 per share.

Zacks Rank: J. C. Penney has a Zacks Rank #4 (Sell), which lowers the predictive power of ESP. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.        

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements:

Skechers USA Inc. SKX has an Earnings ESP of +12.20% and a Zacks Rank #1 (Strong Buy).

Foot Locker, Inc. FL has an Earnings ESP of +1.91% and a Zacks Rank #2 (Buy).

Williams-Sonoma Inc. WSM has an Earnings ESP of +4.55% and a Zacks Rank #2 (Buy).