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Summary

  • Distressed retailer J. C. Penney is expected to post its ninth straight quarterly loss.

  • This quarter the buy-side as represented by the Estimize.com community is expecting J. C. Penney to lose less money than Wall Street is forecasting and to bring in more revenue.

  • On Thursday contributing analysts on the Estimize.com platform expect J. C. Penney to beat Wall Street's loss expectation by 13c per share and for revenue to grow by 5% on a year over year basis.

J. C. Penney Company Inc. (NYSE:JCP) is set to report FQ1 2015 earnings after the market closes on Thursday, May 15th. Distressed retailer J. C. Penney is expected to post its ninth straight quarterly loss. In recent months the fallen discount clothing chain has focused on closing stores and cutting costs. But this quarter revenue is finally expected to be on the rise. Wall Street is expecting J.C. Penney's year over year revenue to grow by 3% and for the company to post a loss of 4c fewer per share than it did last year. Here's what investors are expecting from J. C. Penney on Thursday.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

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(Click Here to see Estimates and Interactive Features for J. C. Penney)

The current Wall Street consensus expectation is for J. C. Penney to report -$1.27 EPS and $2.716B revenue while the current Estimize.com consensus from 29 Buy Side and Independent contributing analysts is -$1.14 EPS and $2.773B in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting J. C. Penney to lose less money than Wall Street is forecasting and to bring in more revenue.

Over the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting J. C. Penney's EPS and revenue 3 times each. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.

More importantly it does a better job of representing the market's actual expectations. It has been confirmed by Deutsche Bank Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. Here we are seeing a larger than usual differential between the loss expectations from Wall Street and Estimize.

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The distribution of quarterly loss estimates published by analysts on the Estimize.com platform range from -50c to -$1.67 per share and from $2.525B to $3.200B in revenues. This quarter we're seeing a wide range of loss and revenue estimates.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wide distribution of estimates signals less agreement in the market, which could mean greater volatility post earnings.

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Throughout the quarter the Wall Street EPS consensus fell from a high of -$1.19 to -$1.27 while the Estimize consensus plummeted before rising from a low of -$1.23 to -$1.14. Meanwhile Wall Street reduced its revenue consensus from $2.808B to $2.716B while the Estimize consensus also sank from $2.866B to 2.773B throughout the quarter. Timeliness is correlated with accuracy and downward analyst revisions going into a report are often a bearish indicator.

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The analyst with the highest estimate confidence rating this quarter is turbinecity who projects -$1.26 EPS and $2.738B in revenue. turbinecity was our Winter 2014 season winner and is ranked 3rd overall among over 4,450 contributing analysts. Over the past 2 years turbinecity has been more accurate than Wall Street in forecasting EPS and revenue 60% and 54% of the time respectively throughout a massive 2,645 estimates.

Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case turbinecity expects J. C. Penney to edge past the Street's expectations but fail to live up to the consensus from the Estimize community.

While Wall Street is expecting a small gain of 3% in sales and a reduction in the quarterly loss of 4c per share compared to last year, the Estimize community has moderately more hopeful expectations. On Thursday contributing analysts on the Estimize.com platform expect J. C. Penney to beat Wall Street's loss expectation by 13c per share and for revenue to grow by 5% on a year over year basis.

Disclosure: No positions

Source: Will J.C. Penney Finally Get Its Sales Growing Again This Quarter?