J.C. Penney Earnings: What Should Investors Expect?

J. C. Penney Company, Inc. JCP is slated to report fourth-quarter fiscal 2014 results on Feb 26. Last quarter, it posted a positive surprise of 7.2%. Let's see how things are shaping up for this announcement.

Factors Affecting This Quarter

J. C. Penney's comparable-store sales (comps) for the combined nine weeks of November and December were up 3.7% year over year. Buoyed by strong comps data, management expects fourth-quarter fiscal 2014 comps to be on the higher end of its previously provided guidance of 2-4%. However, management was tight lipped about margins, which raises some concern, as the holiday season was a highly promotional one.

Earnings Whispers?

Our proven model does not conclusively show that J. C. Penney is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: ESP for J. C. Penney is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate stand at 13 cents a share.

Zacks Rank: J. C. Penney carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, the company's ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Casey's General Stores, Inc. CASY has an Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy).

The Kroger Co. KR has an Earnings ESP of +4.49% and a Zacks Rank #2.

Kohl's Corp. KSS has an Earnings ESP of +0.56% and a Zacks Rank #2.