U.S. Markets closed

Is J.C. Penney (JCP) Set to Miss Q1 Earnings Estimates?

Benjamin Rains
Sirius XM (SIRI) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Shares of J.C. Penney JCP dipped 1.06% on Monday, before climbing briefly after-hours, in a sign that investors might be unsure what to expect from the struggling department store’s first quarter financial results. Let’s take a quick look to see how J.C. Penney’s top and bottom lines are projected to perform and if it is expected to beat or miss earnings estimates.

J.C. Penny has seen its stock price fall 46% over the last year and 25% during the last 12 weeks. The department store, like many other retailers, faces continued pressure from online sellers such as Amazon AMZN as well as increased competition from other lower-priced retailers like Kohl's KSS and Burlington Stores BURL.

With that said, J.C. Penny could turn things around, at least in the near-term, if the company is able to report strong Q1 results.

J.C. Penny Q1 Outlook

Our current Zacks Consensus Estimate is calling for J.C. Penny’s quarterly revenues to fall by 3.8% to touch $2.6 billion. Meanwhile, on the opposite end of the income statement, the retailer is projected to swing from adjusted quarterly earnings of $0.06 per share in the year-ago period to a loss of $0.22 per share in Q1.

Moving on, investors also need to understand what chance J.C. Penny has to top our earnings estimate as this could help its stock price climb in the near-term despite its expected quarterly loss. Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise, either way.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

In contrast, a stock with a Zacks Rank #3 (Hold) or worse, coupled with a negative Earnings ESP, is one that we typically want to avoid during earnings season.

J.C. Penny’s Most Accurate Estimate—the representation of the most recent analyst sentiment—calls for a loss of $0.28 per share, which comes in 6 cents worse than our current consensus estimate. The company is also currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of -28.44%.

Therefore, investors can consider J.C. Penny a stock that could fall short of quarterly earnings estimates when it reports its Q1 financial results before the market opens on Thursday.

Fellow department store giants including Macy’s M and Nordstrom JWN also report their quarterly earnings result this week. So make sure to come back here for complete breakdowns!

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


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
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Nordstrom, Inc. (JWN) : Free Stock Analysis Report
 
Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
 
Macy's, Inc. (M) : Free Stock Analysis Report
 
J. C. Penney Company, Inc. (JCP) : Free Stock Analysis Report
 
Kohl's Corporation (KSS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research