J. C. Penney Company, Inc. (JCP) is slated to report its first-quarter fiscal 2013 results on May 16, 2013. In the last quarter, it posted a negative surprise of 926.3%. Let’s see how things are shaping up for this announcement.
Factors This Past Quarter
J. C. Penney’s earlier pricing and marketing strategy resulted from the company’s disappointing performance. Moreover, the company’s restructuring initiatives have been crumbling as the company is exhibiting no signs of improvement.
J. C. Penney failed to obtain a positive response from customers for its pricing mechanism, which is well reflected through its poor sales results. It is believed that rather than harping on its restructuring efforts, the company should have been more vocal regarding its pricing mechanism and better aligned its marketing efforts to attract buyers.
Our proven model does not conclusively show that J. C. Penney is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. This is not the case here as you will see below.
Zacks ESP: ESP for J. C. Penney is 0.00%. This is because the Most Accurate Estimate stands at -$1.13, which is in line with the Zacks Consensus Estimate.
Zacks Rank #5 (Strong Sell): J. C. Penney’s Zacks Rank #5 (Strong Sell) lowers the predictive power of ESP because the Zacks Rank #5 when combined with 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks That Warrant a Look
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Gap, Inc. (GPS), Earnings ESP of +3.51% and a Zacks Rank #2 (Buy).
Campbell Soup Company (CPB), Earnings ESP of +1.79% and a Zacks Rank #2 (Buy).
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