A Penney For Your Portfolio? (JCP)

J.C. Penney JCP reported better than expected earnings this morning, and it looks like Bill Ackman and company are on their way to turning around the storied retailer. Maybe it's time to think about joining Mr. Ackman, as well as Steven Roth of Vornado Realty VNO. The company reported fourth quarter earnings of $1.09 per share on revenues of $5.7 billion. Same-store-sales increased 4.5% year-over-year. Wall Street had expected earnings of $1.08 per share. In addition to the better than expected earnings, the company announced it would buyback $900 million worth of shares, which is starting in March. Myron E. (Mike) Ullman, III, chairman and chief executive officer, said, "Our performance in 2010 reflects the strides we have made to deliver on our operating goals and position jcpenney as a retail industry leader. This was particularly evident in the fourth quarter when the actions we took during the year -- including new growth initiatives and improvements across our merchandise assortments, redefining the jcp.com experience and driving efficiencies across our Company -- enabled us to achieve sales, market share and profitability growth that surpassed our expectations, and to establish a share buyback plan which will return value to our shareholders." J.C. Penney expects comparable store sales growth in 2011 to be in the low- to mid- single digit range. Total sales are expected to grow in the low-single digit range in 2011. The Company noted that its total sales are expected to grow at a slower rate due to the discontinuation of its catalog business and the Company's transition out of its outlet store business over the next two years. J.C. Penney expects gross margins to be around 39%, which is what 2010's gross margins were. For the full year, earnings per share are expected to be in the range of $2.00 to $2.10 per share. This guidance does not include the impact from the Company's share repurchase program mentioned above. Capital expenditures for the year are expected to be approximately $650 million to support the Company's continued investment in its existing store base, as well as key merchandising and growth initiatives, including the expansion of MNG by Mango, Call it Spring by The ALDO Group and Sephora inside jcpenney. For the first quarter of 2011 specifically, the Company expects comparable store sales to increase 3 to 5 percent over last year, with earnings in the range of $0.18 to $0.23 per share. This includes one-time charges of $0.02 per share related to expenses associated with the renewal of the Company's revolving credit facility ahead of its maturity in 2012, as well as $0.01 per share for restructuring charges as previously announced by the Company on January 24, 2011. Bill Ackman has talked extensively about how he sees tremendous value in J.C. Penney, and not from the company's vast amounts of real estate, of which it owns all of. Ackman has said that for a company that's trading around 5 times EBITDA, it has the most upside of any company in his portfolio. Ackman, along with Roth, are now on the board of directors at J.C. Penney. With Ackman, improving earnings results and a brand-spanking new $900 million buyback on your side, maybe it's time to put a little Penney in your portfolio, and make some serious coin.