1-Star Stocks Poised to Plunge: J.C. Penney?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, department store operator J.C. Penney (NYSE: JCP  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at J.C. Penney's business and see what CAPS investors are saying about the stock right now.

J.C. Penney facts

Headquarters (founded) Plano, Texas (1902)
Market Cap $5.0 billion
Industry Department stores
Trailing-12-Month Revenue $16.5 billion
Management CEO Ronald Johnson (since November 2011)
CFO Kenneth Hannah (since May 2012)
Return on Equity (average, past 3 years) 1.8%
Cash/Debt $839.0 million / $3.1 billion
Dividend Yield 3.6%
Competitors Kohl's
Macy's
Sears

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 30% of the 862 members who have rated J.C. Penney believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star MajorBob04, tapped the stock as a particularly unfashionable pick:

J.C. Penney is a well-known brand, but their current selection and style of clothing makes them a second tier apparel company. They are caught between serving the current customers, who are getting older and migrating to more expensive tastes, and the new generation that views [J.C. Penney] as older generation fashion. They would be well-served to look at [establishing] new brands or acquiring small / new niche companies.

Tough choices, but I don't see how they'll continue to deliver on expectations for growth and/or earnings.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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