JC Penney Market Cap Now Less Than 10% of Revenue

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J.C. Penney Co. Inc. (NYSE: JCP) saw its shares absolutely crater early on Friday, hitting an all-time low, reaching back nearly half a century. What caused this incredible drop? As many familiar with the company know, it has been on the rocks for quite some time, but its most recent earnings report seems to have pushed shares over the ledge.

Excluding Friday’s crash, the stock was down close to 43% year to date. Over the past 52 weeks the stock was down closer to 50% — already setting a bad precedent for what would be a dreadful earnings report.

One financial metric worth pointing out in this report is that the total addressable market cap of J.C. Penney, $1.2 billion, makes up about 10% of the current annual revenue run rate. In a sense, J.C. Penney is looking like a sinking ship. (NYSE: JCP)

However, J.C. Penney was not alone this quarter, as retailers in general were beaten down. Notable exceptions to this beat down included Michael Kors and Ralph Lauren.

Looking ahead to next week, we can expect to see Walmart and Target report. And as larger contenders in the retail space, they might see a more favorable outcome because they can actually grow comparable sales.

Retail in general has been one of the worst performing industries in 2017, and after seeing the reports from this week, it makes sense. J.C. Penney’s earnings report seemed to be the cherry on top of this awful sundae.

In terms of its earnings report, the struggling retailer said that it had a net loss of $0.09 per share and $2.96 billion in revenue. That compared with consensus estimates from Thomson Reuters that called for a net loss of $0.05 per share and $2.84 billion in revenue. In the same period of last year, a net loss of $0.05 per share and revenue of $2.92 billion were reported.

Comparable sales declined 1.3% for the most recent quarter, resulting in a positive two-year stack of 0.9%.

As for guidance for the 2017 full year, EPS are expected to be between $0.40 and $0.65, and comparable sales are expected to be in the range of −1% to 1%. The consensus estimates are $0.49 in EPS and $12.2 billion in revenue for the year.

Shares of J.C. Penney were last seen down about 17% at $3.92 on Friday, after earlier hitting a low of $3.85. The consensus analyst price target was $6.83, and the 52-week high is $11.30.