Retailer J.C. Penney Co. Inc. (NYSE: JCP) reports fiscal first-quarter earnings after markets close Wednesday, and analysts are looking for a per share loss of $0.77 on revenues of $2.87 billion. In the same quarter of 2014, J.C. Penney posted a net loss of $1.16 on revenues of $2.8 billion.

If this is progress toward a turnaround, it is going in super-slow motion. Investors must be getting the message, finally, as the stock traded down about 4.5% Wednesday morning.

The Easter holiday shift into March should not have any impact on the quarterly results because J.C. Penney’s first quarter closed at the end of April. Gasoline prices, which began rising in mid-March, may get some blame if the numbers are weak, and so will poor weather in the early part of the quarter. In other words, if the company reports results that are no better than so-so and it blames gas prices and lousy weather, the fault will not lie in the stars and the slo-mo turnaround will have stalled again.

ALSO READ: 15 Companies Losing the Most Money

We noted earlier this week that analysts at Sterne Agee CRT are maintaining their Neutral rating on the stock because they see no clear indication that the turnaround is “sustainable.” The analysts are encouraged by the improving sales trend, citing potential full-year margin expansion of 300 basis points driven by more profitable clearance sales and higher private label penetration.

Sterne Agee expects a year-over-year same-store sales increase of 4% for the quarter and full-year same-store sales growth range of 3% to 5%.

J.C. Penney still owns and operates too many stores and it needs to close far more than the 40 or so it has committed to closing this year. The problem the company has is that the restructuring costs associated with closing more stores may be more than it can bear. We have noted before that J.C. Penney’s debt service costs are high and that the company should just bite the bullet and close the stores. We do not expect J.C. Penney to announce further closures with this report, but if they do, and if the number is large enough, investors could reward the stock regardless of how awful the results turn out to be.

The stock traded down about 3.3% just ahead of the noon hour on Wednesday, at $8.62 in a 52-week range of $5.90 to $11.30. The consensus price target on the stock is about $8.40, and the high target is $15.00. For the record, the book value per share based on the current price is around $6.30. Why investors think the company is worth $2.32 per share more than that is left as an exercise for the reader.

ALSO READ: The 5 Most Shorted NYSE Stocks

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.