J. C. Penney Growth Initiatives Push it to Strong Buy
On Oct 10, 2014, Zacks Investment Research upgraded J. C. Penney Company, Inc. (JCP), the departmental store retailer, to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
J. C. Penney has witnessed positive estimate revisions on the strength of positive tidings at the company.
J. C. Penney has been on a turnaround mission for 18 months now and has made noteworthy progress so far. At its Analyst Day meeting held a couple of days back, the company highlighted several growth strategies.
Among these initiatives, the company plans to rejuvenate key areas like beauty, jewelry and fashion accessories to generate higher footfall, develop eCommerce with special focus on mobile commerce and additional facilities like same-day shipping and delivery along with enhancing store productivity of its home stores.
The company also plans to open more Sephora stores across several other locations and has partnered with The Walt Disney Company (DIS) to bring over 100 Disney shops at its outlets by the 2015 back-to-school season. It has inked a deal with Hallmark to experiment a hallmark shop concept in 15 of its locations by this fall.
In addition, the company will bring together a compelling assortment of brands both in house and other big national brands at the J. C. Penney stores, to drive traffic.
As per the company, these initiatives provide an opportunity to generate $1.2 billion in EBITDA by 2017. Further, the company expects to realize incremental sales of $2 billion over the next three years, implying a mid single-digit growth. Also, J. C. Penney has delivered three straight quarters of positive sales by maintaining focus on key business areas.
Management believes that the company is on track to regain its market position as it is augmenting sales, driving gross margins and managing costs efficiently. With its growth initiatives underway, the company is hopeful of achieving profitability and providing long-term shareholder value.
All these factors underscore the company’s growth prospects, justifying its current Zacks Rank. The Zacks Consensus Estimate improved 16.2% for 2015 and 17.2% for 2016 as most of the estimates witnessed improvement in the last 60 days.
Other Stocks to Consider
Other top-ranked stocks worth considering in the retail space include Citi Trends, Inc. (CTRN) and Christopher & Banks Corporation (CBK), each carrying the same Zacks Rank as J. C. Penney.
Read the Full Research Report on JCP
Read the Full Research Report on DIS
Read the Full Research Report on CTRN
Read the Full Research Report on CBK
Zacks Investment Research
