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J. C. Penney Company, Inc. Message Board

  • lu.madar87 lu.madar87 Oct 6, 2013 9:11 AM Flag

    "Why J C Penney Could be worth $18.00" from Seeking Alpha 10/2/13 - the media and shorts' viciousness might actually signal a time to turn

    J.C. Penney: Why It Can Go To $18+ Per Share And Is Good For At Least A Trade
    Oct 2 2013, 14:30 | 79 comments | about: JCP

    Disclosure: I am long JCP. (More...)

    As a value investor, I get interested in almost any security that has been cut in half year to date and is trading at multi-year lows - especially one with a storied though tarnished brand like J.C. Penney (JCP). So I was trying to understand the bull case a bit better with a friend who had also looked at JCP. The bear case, we can read in the paper and SA every day.

    I view JCP as an oversold stock and therefore as a potential trade as news and sentiment could not be worse. I believe that most if not all of the 4 large holders post Ackman (Bass, Soros, and Glenview) have all probably bailed with Perry over the massively dilutive offering, judging by the volume alone (the entire float and then some has turned over). By the numbers, this is a much harder bull case than Best Buy (BBY) was this time last year as things have really gone off the rails vs. BBY where there were some signs of stability and no real liquidity issues (exactly the opposite - an LBO bid by the founder). To own this stock, you have to believe that the staggering decline from $17 billion in sales in just two years ago to $12 billion estimated this year can be mitigated (the Ron Johnson effect). By going back to couponing and low-end private label brands that its old customers liked, it is conceivable that JCP could get back to $15 billion of top line - a little better than half way back. It also seems possible that JCP could get back to a 11% EBITDA multiple on that sales base or $1.65 billion. 6x that number is $9.9 billion. I am going to assume it burns through all the money just raised until break even hits and use the Bloomberg net debt number of $4.3 billion, which gets you $5.6 billion of equity. Divide that number by 304 million proforma shares and you are at $18.42.

    Sentiment: Buy

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    • Disclosure: I do not hold any JCP position.

      Just read an article on yahoo news that says JC Penny is worth less than $7... and in the worst pessimistic view, it goes around $0-$4 and $7 should be the ceiling, not the floor.

      I wouldn't bet on $18+ looking at the yearly trend action. At least not any time soon.

      Sentiment: Sell

    • Of course this article was never posted on the NASDAQ website for JCP, and was generally buried, but some article from same source Seeking Alpha by White Elephant or someone, who admits to being SHORT on the stock, IS featured -- trying to get stock down to the shorts' $7.00 dream target. The financial media including CNBC work for the hedge funds and slant the articles -- you can't call this "news," it's openly biased interpretation and wishful thinking -- their way.

      Of course hedge funds want to keep loading cheaper before they drive the price up.

      Following lead of Goldman Sachs which got a triple sweetheart deal with the 9/26 public offering: also got right to buy additional 12.5MIL shares at ANY price stock reached 30 days from then: gee, the geniuses on the JCP Board didn't realize they're handing the SQUID a huge incentive to drive down stock price?

      Ullman and the current Board should follow Ackman/Johnson OUT THE DOOR to regain investor confidence in JCP:
      if Ullman's exit is announced the price will SOAR in a nanosecond!

      As it is the frenzied hostility toward the stock from shorts is actually a GOOD sign, that tide is turning and they're afraid. (See the other side of the story, Seeking Alpha article of 10/2: Why JCP Could be Worth $18.42."

      Sentiment: Buy

7.85-0.65(-7.65%)Mar 2 4:01 PMEST

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