Seeking Alpha

Analysis: J.C. Penney's cash issue isn't going away

  • Sterne Agee continues to fret over the cash situation at J.C. Penney (JCP -3.9%) as it maintains its rating at Neutral.
  • Analyst Charles Grom thinks cash will dip as low as $250M in Q3 which indicates the retailer might need to pull off another major move in order to keep paying the bills.
  • The prior price target from Sterne of $3 is suspended.
Comments (15)
  • DeepValueLover
    , contributor
    Comments (8130) | Send Message
     
    Why couldn't JCP simply sell debt?

     

    Sell the JCP optical centers?

     

    Is there a shortage of demand for high yield debt around the world?

     

    Issuing stock could also help keep the wolves at bay.

     

    This company has ~$12 billion in annual revenues.
    20 Feb, 10:33 AM Reply Like
  • mirageseeker
    , contributor
    Comments (22) | Send Message
     
    debt interest alone is gonna kill the cash flow
    20 Feb, 10:52 AM Reply Like
  • mirageseeker
    , contributor
    Comments (22) | Send Message
     
    The rest of your questions:

     

    Sell the JCP optical centers?
    How much cash can this raise? Most likely sold with a distressed price since it's a fire sale. Plus aren't these already used as collateral for some of their existing debt?

     

    Issuing stock could also help keep the wolves at bay.
    Issuing stock will definitely dilute the existing shareholders, further drive down the stock price.

     

    This company has ~$12 billion in annual revenues.
    The company also has 8.9 billion in COGS, 4.85 billion in SG&A. 14Billion USD total in operating expense, so how much net income or cash flow will that give JCP? It's all about cash flow after all.
    20 Feb, 11:29 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8130) | Send Message
     
    I don't see why they can't cut operating expenses back to $10 billion with store closures.

     

    ...and liquidity should take precedence over the stock price in an emergency situation such as this.
    20 Feb, 10:00 PM Reply Like
  • Ocean Saratoga
    , contributor
    Comments (49) | Send Message
     
    Sterne appears to be floundering over their obvious unwarranted bashing of JCP. They go from a $9 target to $3 with no material change in company operations? The last reporting period showed same store increases. The question is - why did it take Sterne so long to see the light? If they are so smart, why did they have a $9 target if things were already so bad? What about commenting on JCP's online sales? New management team? Latent resources not capitalized at full value such as the land around the Corporate HQ in Plano business park? JCP was just given a upgrade by a reputable firm - forget Sterne criticism.
    20 Feb, 10:54 AM Reply Like
  • larryfrito
    , contributor
    Comments (4) | Send Message
     
    Dude, think what u want, this Jcp is a dead man walking, there is no question about that. It is not bashing to say this, only stating the obvious. What in Today's world is going to change concerning JCP the retailer. Have you considered their position in todays retail world. They have the next two quarters to perform or else they have a shortfall heading into Xmas. If you think the vendors were concerned last year (remember?) this coming pre Xmas will be far worse.
    Good luck.
    20 Feb, 08:37 PM Reply Like
  • Ocean Saratoga
    , contributor
    Comments (49) | Send Message
     
    Noticed that Sterne changed their stance to Neutral in the statement above. Remember yesterday it was "suspended" whatever that was supposed to mean.

     

    Let me ask again. If they were so smart, why did they have a target of $9 long after others made their downgrades. Then, they go overboard with a ridiculous $3 which is not going to happen.

     

    They are looking like a bunch of clowns.

     

    No doubt the press release yesterday was in response to a new target of $6.50 by another firm. The bear raid ensued but will be short lived.
    21 Feb, 08:32 AM Reply Like
  • Enersavr
    , contributor
    Comments (107) | Send Message
     
    Until there are criminal penalties for analyst that requires factual justification of upgrades or downgrade we have to deal with idiots like this. Just have to stay with the facts and make our own decision. The sad part is that many do not.
    20 Feb, 11:08 AM Reply Like
  • schroederltd
    , contributor
    Comments (35) | Send Message
     
    Value trap, $RSH like...
    20 Feb, 11:31 AM Reply Like
  • thewalkingdad
    , contributor
    Comments (40) | Send Message
     
    what is the meaning behind suspending a price target - that they just don't have an opinion - too hard to predict? is it signiificant? Enquiring minds want to know.
    20 Feb, 11:41 AM Reply Like
  • Fast Lane
    , contributor
    Comments (237) | Send Message
     
    All manipulation, these post are who can drive their ego bigger, better and faster to make the market squeal. Let's hear what JCP has to say next week.
    20 Feb, 12:38 PM Reply Like
  • not_a_user
    , contributor
    Comments (6) | Send Message
     
    @DeepValueLover, JCP currently pays ~$100M per quarter in interest alone for their outstanding debt. At their current rate of cash burn, no one is going to lend them any more money.
    20 Feb, 01:18 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8130) | Send Message
     
    There is a global obsession with high yield and demand is unlimited for income. That is the story of global deflation.

     

    So JCP would have no problems lining up buyers for new debt..especially if coupled with a stock sale.
    20 Feb, 10:03 PM Reply Like
  • fliper2058
    , contributor
    Comments (1422) | Send Message
     
    Anyone know their sales forecast and gross margin forecast?
    20 Feb, 01:42 PM Reply Like
  • SA_Member_11523241
    , contributor
    Comments (83) | Send Message
     
    And a little enthusiasm would help convince investors they know where they are going.
    21 Feb, 09:13 AM Reply Like
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