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J.C. Penney Stuns with Earnings Strength

By Mark Reeth and Sean O'Reilly - Mar 9, 2014 at 9:00AM

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Yes, you heard correctly, J.C. Penney reported a good quarter. Is the turnaround finally happening?

Last week, department store retailer J.C. Penney ( JCPN.Q ) announced quarterly and full-year earnings, and to everyone's surprise, the report showed some strength. Same-store sales were trending upward, and the company posted significantly less of a loss than analysts had anticipated. Standard & Poor's also came out to say that bankruptcy for the company is now off the table for the foreseeable future. CEO Mike Ullman also came out to give strong guidance for fiscal year 2014, which the market also loved.

However, does this mean that buying on the thesis of J.C. Penney's turnaround story is now officially a good idea? In this segment of Thursday's Consumer Countdown, Motley Fool analysts Mark Reeth and Sean O'Reilly say not so fast. While Ullman has done a good job of steering the company away from the brink that it was headed for under former CEO Ron Johnson, bringing JC Penney back onto the path it was on before still doesn't make it an exciting prospect for investors. Facing a sea of competitive headwinds and with no compelling competitive advantage to keep customers coming in the door, this company may still have a mountain to climb in the long run.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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J. C. Penney Company, Inc. Stock Quote
J. C. Penney Company, Inc.
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