Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of J.C. Penney Company (JCPN.Q) were wowing the market this morning, climbing as much as 20% after its first-quarter earnings report soared past expectations.  

So what: After sales had plummeted sharply under former CEO Ron Johnson's botched transformation, the department-store chain has gotten back to basics and seems to finally be on the track toward recovery, as same-store sales jumped 6.2% in the quarter. Management noted that the metric improved each month, a further sign that J.C. Penney is looking up. That improvement in organic sales drove a 6.1% gain in total revenue to $2.8 billion, better than the $2.71 billion analysts expected. Further down the income statement, Penney saw improvement in nearly every category, as gross margin jumped 230 basis points to 33.1% and SG&A expenses fell 390 basis points.

Now what: As a result, J.C. Penney saw its operating loss shrink 49%, and reported a net loss of $1.15 per share the quarter, beating expectations at $1.25. Looking ahead, management sees for the full year mid-single-digit growth in comparable sales, significant improvements in gross margin, and breakeven free cash flow. Clearly, the company has made meaningful improvements, but that wide per-share loss demonstrates how big of a hole the company is in. This report clearly shows Penney is making progress, but I'd still question whether it can return to profitability.