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A lot of pixels have been burned since J.C. Penney Co. Inc. (NYSE: JCP) reported first quarter after Thursday’s market closed. The struggling retailer beat consensus estimates on both earnings and revenues, and investors dare to hope that the company is truly turned around and heading back in a positive direction.

That may be the case, but there are some things to look at that might have been overlooked in the general euphoria. First of all, let’s take a look at same-store sales which rose 6.2% year-over-year in the first quarter. That’s a really good number, but it doesn’t mean much in the context of where Penny’s started from. In 2012 the company’s first-quarter same-store sales fell 18.9% and then fell another 16.6% in the first quarter of last year. Yes, the store had to start somewhere, but let’s keep the same-store sales increase in perspective.

It is relatively good news that the company’s store count has not changed much yet. Penney’s said in January that it would close 33 underperforming stores. At the end of February the company had 1,094 stores compared with 1,104 at the same time a year ago. In 2012 the total store count was 1,102. As the company closes more poorly performing stores the same-store sales number should rise.

Penney’s is also going to change the way it counts same-store sales. Going forward the company will exclude certain items, including sales return estimates and liquidation sales, from the calculation. Under the new calculation method the company’s same-store sales rose 7.4% in the quarter, including an online sales jump of 25.7%.

The company’s gross margins rose to 33.1% year-over-year, up from 30.8% a year ago. The negative impact of clearance sales hurt margins in the first two months of the quarter. By the end of the quarter fewer clearance sales brought the sales mix back to historical levels, but that could just have been luck.

Most of the markdowns due to store closings should hit the books this quarter and the second half of the year is where the tale of the turnaround’s success or failure will be told. In a note this morning, analysts at Sterne Agee maintained a Neutral rating on the stock but raised estimates and warned clients to avoid chasing the short squeeze that is coming in the stock. The analysts also noted that traffic growth remains negative, never a good sign for a brick-and-mortar retailer.

Shares are up more than 15% in the mid-afternoon Friday at $9.65 in a 52-week range of $4.90 to $19.63.

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