J.C. Penney Co. Inc. (NYSE: JCP) reported fourth-quarter and full-year 2017 results before markets opened Friday. The venerable retailer reported adjusted earnings per share (EPS) of $0.57 and $4.03 billion in revenues for the quarter. In the same period a year ago, it reported EPS of $0.64 on revenue of $3.96 billion. Fourth-quarter results also compare to consensus estimates for EPS of $0.47 and $4.05 billion in revenue.

For the full year, J.C. Penney reported adjusted EPS of $0.22 and revenues of $12.51 billion, compared with 2016 EPS of $0.08 and revenues of $12.55 billion. Analysts had forecast EPS of $0.11 and revenues of $12.52 billion. The company recorded a tax benefit of $75 million in the fourth quarter and for the full year that was not included in the adjusted totals.

Same-store sales rose 2.6% in the quarter and 0.1% for the full year. Analysts were looking for a fourth-quarter increase of 2.7%.

There are two obvious problems here: fourth-quarter same-store sales missed estimates and revenues were light, both for the quarter and the full year. And those misses came against low expectations. In the third quarter of 2017, J.C. Penney cut its guidance shortly before announcing results and then skipped over a low bar. Shares popped 15% after results were announced.

The company’s forward price-to-earnings ratio was 19.60 as of last night’s closing bell. That’s the third-highest P/E ratio among a dozen big retailers, trailing only Costco and Ross Stores. Just meeting expectations or missing them by a little does not justify that valuation, and disappointed investors hammered the stock Friday morning.

CEO Marvin R. Ellison said:

For 2017, we improved adjusted earnings per share by 175 %, reduced our outstanding debt levels by over $600 million and generated over $200 million of free cash flow. During the fourth quarter, we delivered our strongest positive sales comps and achieved our largest gross margin improvement for the year. … In 2018, we will intensify our market share efforts in Appliances, Mattresses and Furniture, while continuing to take steps to modernize our apparel assortment and omni-channel.

Cost of goods sold in the quarter rose by 1% year over year, which the company attributed to decreased promotional activity resulting from a better inventory position. For the full year, cost of goods sold rose 1.3% compared to 2016.

J.C. Penney’s outlook for fiscal year 2018 calls for same-store sales from flat to up 2% and adjusted EPS in a range of $0.5 to $0.20. Consensus estimates have same-store sales up 0.7% and EPS of $0.20 on revenues of $12.24 billion.

The company did not provide a first-quarter outlook, but consensus estimates call for a loss per share of $0.16 on sales of $2.63 billion in the quarter.

The stock traded down more than 10% in Friday’s premarket at $3.50 in a 52-week range of $2.35 to $6.40. Analysts had a 12-month consensus price target for Penney of $3.95 before this morning’s announcement.

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