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Tuesday, 09/04/2001

JCP - J.C. Penny

Company Description

J.C. Penny is a retailer, operating 3,800 stores, including 1,111 JCPenny department stores, located in all 50 states, Puerto Rico and Mexico. In addition, the company operates 49 Renner department stores in Brazil. The major portion of the company's business consists of providing merchandise and services to consumers through department stores, catalog departments and home furnishings. Through its subsidiary, Eckerd Corporation, the company operates a chain of 2,640 drugstores located throughout the Southeast, Subelt and Northeast regions of the United States.

Department stores, the company's catalog and the Internet generally the same customer, have virtually the same mix of merchandise and the majority of catalog sales are completed in department stores. In addition, department stores accept returns from sales initiated in all three locations.

Through its indirect wholly owned subsidiary, Eckerd, the company operates a chain of approximately 2,640 drugstores that include the retirement destinations of Florida, Texas and the Carolinas. Revenues for this segment represented 41% of consolidated net sales for fiscal 2000.

(Source: J.C. Penny)

Reasons To Invest

Shares of J.C. Penny are up more than 100 percent so far in the year 2001. The stock has been one of the best performers in the S&P 500 (SPX.X) this year, and for good reason. Further, there's good reason to expect that the company and its stock will continue to out perform its peers and, indeed, the broader market.

After having its share of problems, the company hired a turnaround expert in Allen Questrom, who is currently the Chairman, and Chief Executive Officer. Questrom has since reorganized, reshuffled, and turned J.C. Penny around for the better, and the stock price certainly reflects that much. Prior to taking the helm at Penny's, Questrom performed his magic at other, at the time, beleaguered retailers such as Federated Department Stores and Barney's. Both companies are now, for the most part, hitting on all cylinders. And so is J.C. Penny.

The company has gone to great lengths to reduce its long-term debt, which now amounts to roughly $5 billion. In addition, management has shed unprofitable business divisions and tightened up inventories. All of the aforementioned actions have resulted in a boost to margins and earnings, which are now slated to blossom by about 100 percent next year. Obviously such growth is not sustainable, once the impact of the company's reorganization are fully discounted. But the company should be in a long-term position for growth nonetheless.

The only real clear risk in the stock current is the potential for further deterioration in the economy and consumer spending. But if those two variables stabilize, or at the best rebound over the coming quarters, shares of J.C. Penny should continue out performing the broader market.

DRIP Information:
Shares to Qualify = 1           Accept Foreign Accounts: Yes
Auto-reinvestment = Yes         Temper Enrollment Serv:  Yes

Min/Max Investment = $25 to $10,000/month
Reinvestment Fees: 
Dividend: 0   Cash: $1.50 + 6 cents/share   Auto ReInvest: 0

Transfer Agent:



Industry Group:           Retail  52-week high=$29.50
Annual Dividend Per Share= $0.50  52-week low =$ 8.63
Last earnings 08/15   est=(0.20)  actual=0.11
Next earnings 11-17     est=0.14  versus=(0.24)
                                  P/E = N/A
Analyst Ratings:
Strong Buy    = 1
Moderate Buy  = 3
Hold          = 6
Moderate Sell = 0
Strong Sell   = 0


Copyright 2003

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