Earnings Preview for J.C. Penney (JCP, M, JWN, DDS, KSS)

J.C. Penney JCP is expected to announce its Q1 earnings results on Monday, May 16. Analysts are expecting earnings per share to stand at $0.25, the same level as in Q1 2010. The Street's estimate was lowered by $0.01 in the last seven days. Revenues are projected to be $3.95 billion, or 0.5% higher than in the same quarter a year ago. The company is a retailer, operating 1,108 J.C. Penney department stores in 49 states and Puerto Rico as of January 30, 2010. Its business consists of selling merchandise and services to consumers through its department stores and direct (Internet/catalog) channels. Looking ahead, earning per share is expected to skyrocket year-over-year in the upcoming quarter. For Q2, analysts expect J.C. Penney to post earnings per share of $0.21, or a 250% rise on a yearly basis. For the year as a whole, earnings per share should reach $2.04, or 28.3% higher than a year ago. Analysts expect revenues will grow this year as well, but at a much lower pace. In the upcoming quarter, revenues should reach $4.00 billion, or 1.5% higher than in Q2 2010. For the year as a whole, revenues are expected to stand at $17.93 billion, or an increase of 1% on last year. Investors will closely monitor the state of the overall economy, looking for any improvements in consumer spending. As long as the recovery of U.S. economy is on shaky grounds, consumers will continue to be more cautious. Traders will find some evidence that consumer spending might be starting to recover after the Michigan Consumer Sentiment Index rose to 72.40 in May, above market expectations of 70.00. In April, the index stood at 69.80. Investors will be further encouraged by Macy's M strong Q1 performance. On Wednesday, Macy's announced its earnings per share reached $0.69, or 57.9% above the Street estimate. Last week, Dillard's DDS also announced superb Q1 results. Its earnings per share raced to $1.31, or almost 44% ahead of the Street's estimate of $0.91. Nordstrom JWN also announced its Q1 earnings results above market expectations. While most analysts believed its earnings per share will stand at $0.67, Nordstrom reported earnings of $0.69 per share. The one competitor that failed to beat market expectations was Kohl's KSS, which reported earnings per share of $0.73, in line with the Street's estimate. April provided more good news for retailers, as April sales grew thanks to the surge in Easter shopping. According to Reuters, same-store sales in the main 25 retailers rose by 8.9%, ahead of market expectations of 8.2%. Some retailers fared better than other, however. Unfortunately for J.C. Penney, it was one of the retailers that reported results below market expectations. While most analysts expected its April same-store sales to grow by 8.5%, J.C. Penney managed to achieve an expansion of only 6.4%. At the moment, the majority of rating agencies have a Hold on J.C. Penney. On Friday, its shares lost 0.21% to close the week at $38.44. In the last 90 days, J.C. Penney added 6.72% to its value, however.