J. C. Penney (JCP) Results Solid But Analyst Concerned of Possible Slowdown; Deutsche Bank Comments Following Q2 Print
- Wall St ends flat; Disney, retailers dip on sales worries
- Why Martin Shkreli ONLY Cares About KaloBios Pharma's (KBIO) Stock Price
- China stocks tumble most since summer slump as brokerage probe widens
- FBR Capital's Ives Sees Growing Apple Watch Interest (AAPL)
- Target (TGT) Notes Strong Black Friday Sales Start; Apple, Giant Stuffed Teddy Bear Lead Charge
Deutsche Bank maintained a Hold rating on J. C. Penney (NYSE: JCP) with a price target of $10. 2014 EPS estimated were raised to -1.99 vs -2.51 prior. Analyst Paul Trussell said Q2 performance was strong, but he is concerned of a potential slowdown.
"JCP showed solid trends in its 2Q print, with SSS of 6.0%, a 650 bps improvement YOY in Gross Profit Margins to 36.0%, and strong SG&A control - as SG&A $ were actually down ~6% YOY. Also impressive, JCP produced $90M in EBITDA (its best showing since 2Q12) and the company generated positive FCF of $76M as well. With SSS in the last week of July up double-digits, there is seemingly solid momentum in JCPenney’s business," said Trussell.
"3Q guidance raised an eyebrow for us as SSS are expected to maintain their current growth level despite tougher compares (by 710 bps), GPM is not expected to experience sequential improvement (following a ~300 bps gain from 1Q to 2Q), and SG&A expenses are expected to rise in the back half with higher advertising spending and the first incentive payouts in some time. With the sustainability of the 2Q trends in question, we remain on the sidelines and await execution against tough compares or a compelling strategic plan outlined in October at the investor day. At $10, we believe the stock is fairly valued discounting back 8.0x our 2016 EBITDA estimate of $901M," he added.
Shares of J. C. Penney closed at $9.74 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Argus Upgrades Palo Alto Networks (PANW) to Buy
- Jefferies Sees Opportunity for Guess? (GES) in Asia; Jefferies Raises Price Target to $22
- UPDATE: Raymond James Upgrades Tech Data (TECD) to Market Perform
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Retail Sales
Related EntitiesDeutsche Bank
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!