Yippee!!! JC Penney ONLY lost $167 million in the first quarter. The Wall Street shysters are ecstatic because they BEAT expectations. Buy Buy Buy.
This loss now brings JC Penney’s cumulative loss since 2011 to, drum roll please, $3.5 BILLION. They haven’t had a profitable quarter in over four years. But, they are always on the verge of that turnaround just over the horizon.
Wall Street has told you to buy this stock from $42 in 2012 to it’s current pitiful level of $9. They tout the wonderful 3.4% increase in comparable sales. They fail to mention that first quarter 2016 sales are only 30% below first quarter sales in 2011.
They fail to mention that JC Penney burned through another $274 million of cash in the first quarter. Their equity has dropped by $1 billion in the last year, while their long term debt has gone up by $500 million.
In 2011 they had $5.5 billion of equity and $3.1 billion of debt. Today they have $1.8 billion of equity and $5.3 billion of debt. They are dead retailer walking. The only reason they haven’t gone belly up is the Federal Reserve manipulated ultra low interest rates that encourage mal-investment and keep zombie companies like JC Penney alive.
Being able to borrow at low rates will delay the end, but the end is still coming for this bloated dying pig of a company. The future is certain.
But don’t listen to me. Listen to Wall Street. This is the buy of a lifetime.