Kohl’s Corporation (KSS), Macy’s, Inc. (M): J.C. Penney Company, Inc. (JCP) Is Turning Itself Around, but Stiff Headwinds Exist

Macy’s, Inc. (NYSE:M) is known as a top-notch retailer because of its strong fundamentals and its ability to appeal to almost every consumer. But it recently missed earnings expectations for the first time in six years. This, combined with Wal-Mart’s warning of a weakening consumer is concerning for retail as a whole. Macy’s, Inc. (NYSE:M) stock has paid the price, depreciating 8% over the past month, at a time when J.C. Penney’s stock appreciated nearly 10% on turnaround hopes. This is the complete opposite of what took place over the past five years.

JCP data by YCharts

If you’re beginning to favor J.C. Penney over Macy’s, Inc. (NYSE:M), don’t get too excited just yet. While J.C. Penney has more upside potential on a turnaround, it’s not nearly as stable as its peers.

JCP Revenue TTM data by YCharts

Earnings trends haven’t impressed either:

JCP EPS Diluted TTM data by YCharts

Also, J.C. Penney has a debt-to-equity ratio of 2.51 versus much healthier debt-to-equity ratios of 0.76 and 1.18 for Kohl’s Corporation (NYSE:KSS) and Macy’s, Inc. (NYSE:M), respectively. These healthier fiscal positions also allow Kohl’s Corporation (NYSE:KSS) and Macy’s to pay dividends. They currently yield 2.7% and 2%, respectively, whereas J.C. Penney doesn’t offer any yield.

Conclusion
J.C. Penney Company, Inc. (NYSE:JCP) is likely to improve, but not enough to consistently grow during such a difficult macroeconomic environment. Expect a lot of ups and downs. If you want to roll the dice, it can be looked at as a good speculative play. If you’re looking to invest in more financially stable operations and like to collect dividend payments, then Kohl’s Corporation (NYSE:KSS) and Macy’s, Inc. (NYSE:M) will be better options. That said, none of these names may be resilient if the consumer weakens.

The article J.C. Penney Is Turning Itself Around, but Stiff Headwinds Exist originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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