Is J.C. Penney Company, Inc. (JCP) a Buy?

Competitors won’t roll over
J.C. Penney would gladly accept slightly lower gross margin in the nearmterm if that would allow it to quickly regain the revenue it has lost since the beginning of 2012. However, competitors such as Macy’s, Inc. (NYSE:M) and The TJX Companies, Inc. (NYSE:TJX), which have benefited from J.C. Penney’s recent struggles, won’t allow the company to win back customers without a fight. Those competitors are likely to increase their own promotional activity if necessary to sustain their market share gains.

The journey back from J.C. Penney’s terrible 2012 will therefore be a long, hard slog, and there’s no guarantee that the company will succeed. J.C. Penney needs to regain billions of dollars of lost sales to remain a viable enterprise. As a result, analysts don’t expect the red ink to end anytime soon. Investors should probably put their hard-earned money elsewhere.

The article Don’t Get Caught Up in the J.C. Penney Hype originally appeared on Fool.com is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg and The Motley Fool have no position in any of the stocks mentioned.

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