Image source: J.C. Penney.

The past four years have been horrible for shareholders in J.C. Penney (OTC:JCPN.Q), with the retailer's stock having failed to share in the gains that many of its peers saw during the long U.S. economic recovery.

Nevertheless, the weakness hasn't stopped Penney from setting ambitious goals for its future, and about a year ago, former CEO Myron Ullman and his management team said that they believed that the retailer could quadruple its pre-tax operating earnings within three years and post 2017 EBITDA of $1.2 billion. At the time, investors were skeptical, and a tough end to 2014 seemed to put thoughts of actually reaching that goal out of shareholders' minds.

Yet recently, some have looked back at Penney's projections and found at least a kernel of hope that they might be achievable. Let's take a look at what J.C. Penney said and why some of those who follow the stock believe the discount retailer could reach its targets by 2017.

What J.C. Penney said
In its presentation, Penney saw plenty of potential throughout its store operations. New in-store concepts like Sephora were at the core of Penney's growth strategy, and revamped offerings in key existing departments like fine jewelry and home furnishings were designed to ensure that repeat customers would have a steady stream of attractive products to shop for. The boosts in the highest-margin areas of the store would play a key role in driving bottom-line gains for the retailer.

At the same time, J.C. Penney identified the need to improve its omni-channel experience immensely. Despite having an e-commerce presence, Penney found itself behind its peers in offering essential services like same-day in-store pickup for online orders. Using existing store locations as shipping points as well as improving the customer-service aspects of its e-commerce operations were also focal points of the company's omni-channel initiatives.

Penney also had to find the right balance in its business model. Effective use of discounting markdowns could unlock huge profits, and Penney also saw value in its many private brands along with the opportunity to use them to improve margins. Add in better use of industry best-practices to keep expenses down, and J.C. Penney thought that EBITDA could climb from the 2014 projection of $300 million to $1.2 billion by 2017.

Can Penney reach the finish line?
Following its analyst-day presentation last year, Penney shares continued their downward path for the remainder of 2014. Yet in 2015, the stock bounced back, and slowly but surely, some investors are getting the sense that Penney is making progress in implementing its long-range strategy.

Analysts at Sterne Agee CRT were the latest to weigh in on the stock earlier this week. Having initially shared the widespread pessimism about the retailer's ability to achieve its goals, the analyst firm now believes that new CEO Marvin Ellison could be the key to execute on Penney's strategic plans successfully.

Much of the analysis centers on the fact that Penney's rivals are doing so much more with their businesses. Pointing to peer retailers with sales per square feet that are nearly double what Penney has managed, Sterne Agee CRT thinks that even getting part of the way back to its pre-recession levels would be enough for the discount department store to push its operating earnings back up. Similarly, efforts to manage markdowns and discounting more effectively while avoiding problems in its supply chain have also paid off with slow but steady progress on the bottom line.

The problem for Penney, though, is that investors have gotten burned with similar stories in the past. Former CEO Ron Johnson was initially heralded as a potential savior for the company, but since his departure, Penney has had to revert to many of the strategies that Johnson initially moved away from. Some would see Ellison's experience as being more directly relevant to Penney's current turnaround needs, but even so, longtime shareholders will be cautious about having too much faith in the future.

For now, Penney has plenty of progress yet to make in order to reach its goals, with EBITDA for the first six months of the current fiscal year amounting to just $194 million. Nevertheless, investors continue to hope for a full turnaround from the department-store retailer, and if it happens, Penney stock could easily build on its gains so far in 2015.

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.