Mall anchor J. C. Penney Company, Inc. reports earnings before the opening bell on Thursday, May 17, as an “option on survival,” as the stock is trading between $1 and $3 per share. Investors buying a stock in this trading range are betting that the company will survive its current woes and eventually thrive once again. In these situations, it is wise to invest only funds that you can afford to lose completely if the stock becomes worthless.
J. C. Penney stock closed Tuesday, May 15, at $2.91, down 7.9% year to date. Shares of J. C. Penney are solidly in bear market territory at 38.7% below the 2018 high of $4.75 set on Feb. 27. The stock is also 7.8% above its 2018 low of $2.70 set on May 8. (See also: Billionaire David Einhorn’s Greenlight Bought 6M J. C. Penney Shares: 13F.)
Analysts expect J. C. Penney to post a loss of between 19 cents and 22 cents per share when the company reports results in the pre-market hours on Thursday. The mall anchor reported better-than-expected earnings on March 2 but generated only a one-day bounce in the stock. It remains to be seen whether a larger-than-expected loss would be tolerated by investors, particularly in the case of worse-than-expected revenue. However, the retailer has had some success increasing online sales and improving the in-store shopping experience, which could make this “option on survival” a good investment choice.
J. C. Penney shares are not owned based on fundamentals – it’s a stock to own if you believe the store will survive at the mall near you. …read more
Read more here: J. C. Penney Remains an ‘Option on Survival’ Into Earnings