Argus: Don't Shop For JCPenney Stock

Despite falling nearly 60 percent over the past year, Argus said in a downgrade note that J C Penney Company Inc JCP still carries "elevated risk" from a technical and fundamental perspective.

The Analyst

Analyst John Eade downgraded J.C. Penney from Hold to Sell.

The Thesis

Department store chain J.C. Penney has posted either losses or marginal earnings per share dating back to 2012 and has consistently reported below-guidance earnings, Eade said in the Thursday downgrade note. (See his track record here.) 

Margins continue to drift lower due to a poor inventory management system and deep discounting within the extremely competitive retail sector, the analyst said. 

The retailer has "substantial work ahead" to turn around its physical stores, which continues to suffer from weak mall traffic trends, Eade said. J.C. Penney's online channel is in need of "catch-up," as it faces competition from stronger rivals, especially Amazon.com, Inc. AMZN, he said. 

From a technical point of view, shares of J.C. Penney are trading much closer to the low end of its 52-week range of $1.04 to $4.75 and showing a bearish pattern of lower highs and lower lows over the past two years, according to Argus. 

The Price Action

J.C. Penney shares were trading up 3.31 percent at $1.40 at the time of publication Friday morning. 

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Photo courtesy of J.C. Penney.