Is Jcp A Good Stock To Buy Fix
When a company declares bankruptcy, its stock still trades, though its ticker symbol changes. That's what's currently happening with J.C. Penney (JCPN.Q), the struggling department store chain that has filed for Chapter 11 bankruptcy protection.
is jcp a good stock to buy
The news, however, is not good for investors who own shares of the company's stock. And while the company being rescued from bankruptcy helps a lot of people, that's not a reason for anyone to buy shares of J.C. Penney.
In a Chapter 11 filing, bondholders, unpaid creditors, lenders, and pretty much anyone or any institution the company owes money to gets consideration before the stockholders do. Usually, those stakeholders end up with more equity, and the company's stock either ceases to exist or the shares you own eventually come to represent a much smaller piece of the company.
The people who tout buying shares of bankrupt companies are day traders or speculators playing a dangerous game. They're treating the stock market like a casino (and they'll lose money in the end like anyone who has a system playing roulette or a "magical" method of beating slot machines).
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J C Penney Company Inc (NYSE: JCP) stock crashed more than 17 percent Friday to its lowest level since the 1980s after the company issued deep cuts to its 2017 guidance ahead of the critical holiday shopping season. The latest cut only adds to investor concerns that JCP will be unable to save its struggling business.
JCPenney reached its peak number of stores in 1973, with 2,053 stores, 300 of which were full-line establishments.[21] However, the company was hard hit by the 1974 recession with its stock price declining by two-thirds.[21]
On December 7, 2011, J. C. Penney purchased 16.6% of Martha Stewart Living Omnimedia stock. J. C. Penney planned to put "mini-Martha Stewart shops" in many of its stores in 2013, as well as create a website with Martha Stewart Living.[47]
In August, J. C. Penney began rolling out a store-within-a-stores with different jean brands and had plans to eventually roll out 100 shops in 683 stores.[55] That month, the company posted a second-quarter comparable-store loss of 22%, with internet sales dropping 33%. At an analyst meeting in New York the same day, Johnson said, "I'm completely convinced that our transformation is on track." J. C. Penney's stock rose 5.9% on Johnson's comments at the analyst meeting, the largest single-day stock increase since late January 2012.[56] In 2012, fourth quarter sales for J. C. Penney were poor. Sales were down 28.4% from a year earlier and same store sales were down 32%. Strategic choices made by Johnson a year earlier, including the change in pricing strategy, were being called into question.[57] It was announced in April 2012 that Nickelson Wooster would become the creative director for J. C. Penney menswear.[58]
On April 8, 2013, Johnson was fired from J. C. Penney after 17 months with the company. Mike Ullman, the retailer's former CEO, was announced as his replacement shortly afterwards.[59] In August, William A. Ackman, of Pershing Square Capital Management, continued his efforts to remove Thomas Engibous, the company's chairman of the board of directors.[60] However, Ackman resigned from the board on August 12, and two new directors were subsequently appointed to the board, one of whom was former Macy's vice chairman Ronald Tysoe.[61][62] On September 26, 2013, J. C. Penney, with Goldman Sachs as the sole underwriter, announced plans to issue 84 million shares of its stock. The move stood in contrast with CEO Mike Ullman's remarks from earlier that day, whereby he did not foresee "conditions for the rest of the year that would warrant raising liquidity".[63][64]
On January 15, 2014, J. C. Penney announced it was closing 33 under-performing stores and laying off 2,000 employees.[69] J. C. Penney's stock continued its decline until their first quarter results in 2014 showed signs of improvement, and sent the share value back into the double digits. In October, it was announced that the company would be tapping former Home Depot executive Marvin Ellison to take on the role of CEO starting in November.[70]
In 2018, J. C. Penney closed permanently at Plaza Palma Real in Humacao, Puerto Rico, after Hurricane Maria devastated the store in September 2017.[82] In May, J. C. Penney reported an adjusted loss of $69 million in the first quarter, even worse than Wall Street predicted, and lowered its projections for the year.[83] Sales fell 4%, also missing estimates. Earlier in 2018, the company announced it would cut 360 jobs at its stores and corporate headquarters. The company lowered its earnings forecast for the year to 13 cents per share at best, and said it could lose as much as 7 cents. J. C. Penney finished the quarter with just $181 million in cash, down from $363 million a year ago. Much of the big decrease was because of a $190 billion debt replace. On May 22, J. C. Penney announced the resignation of their CEO, Marvin Ellison.[83] On October 2, J. C. Penney announced former Jo-Ann Stores CEO Jill Soltau as their CEO, effective October 15. With the announcement, JCPenney's shares rose 9%.[84] The company ranked 235 on the Fortune 500 list of the largest United States corporations by revenue.[85][86] She has also brought new talent and has cleaned out inventory.[87] On December 26, the stock price of J. C. Penney (NYSE: JCP) fell below $1 per share. This was the first time shares fell below $1 ever in the 110-year history of the company, which started trading on the New York Stock Exchange in 1929. The stock fell 68% over the course of 2018, including a 30% drop in December 2018 alone.[88]
The Barchart Technical Opinion widget shows you today's overally Barchart Opinion with general information on how to interpret the short and longer term signals. Unique to Barchart.com, Opinions analyzes a stock or commodity using 13 popular analytics in short-, medium- and long-term periods. Results are interpreted as buy, sell or hold signals, each with numeric ratings and summarized with an overall percentage buy or sell rating. After each calculation the program assigns a Buy, Sell, or Hold value with the study, depending on where the price lies in reference to the common interpretation of the study. For example, a price above its moving average is generally considered an upward trend or a buy.
J.C. Penney (JCP) announced a $900M stock buyback on 25-Feb-11, and has completed $839M in repurchases through 30-Jul-11. Typically, stock buybacks help support stock prices; however, JCP has declined 17.80% vs. a 6.24% decline in the S&P 500 (as of 14-Oct-11) since the repurchase announcement. Additionally, because JCP used cash and short investments to fund the repurchase, they now have less working capital at a time when the US may be facing another economic slowdown.
Based on the named executive officers' (NEOs) compensation structure, management's choice of a stock buyback vs. dividend increase appears to have been influenced by personal financial gain. Other than the CEO, NEOs received 43% of their total 2010 compensation through equity grants, which consisted of 50% stock options, 25% time-vesting RSUs and 25% performance-based RSUs (based on EPS). A stock buyback benefits both stock options and performance shares because there are fewer outstanding shares in the denominator when calculating price and earnings per share. However, as I discuss below, delivering that cash to shareholders through other means may have provided a better outcome for shareholders.
Management's $900M buyback has failed to increase JCP's stock price and has left the company in a more vulnerable working capital position. Management appears to have been driven by personal interests rather than maximizing shareholder wealth. Because management receives a large portion of their compensation through stock options and performance-based RSUs, lowering the number of outstanding shares is their preferred choice.
Stock options - Since stock prices fall on the ex-dividend date to reflect the amount of wealth leaving the company to shareholders, over time this would likely limit the upside potential of the stock price and ultimately the options' moneyness (amount the current stock price is greater than the option strike price). Given that management's options have a 10 year term, a larger dividend will erode option value over time making this alternative less attractive to management. 041b061a72