J. C. Penney Company, Inc. Equity Valuation and Analysis As of ...

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Z-Score AnalysisZ-Score=1.21.43.32002 2003 2004 2005 2006Working Capital 4,194 2,759 4,980 3,940 3,156+Total Assets17,867 18,300 14,127 12,461 12,673Retained Earnings 2,817 1,728 812 512 922+Total Assets17,867 18,300 14,127 12,461 12,673EBIT 1,107 790 1,312 1,577 1,922+Total Assets17,867 18,300 14,127 12,461 12,6730.61Market Value of Equity 4,533 10,346 14,249 15,096 18,530+Book Value of Liabilities 11,497 12,875 9,271 8,454 8,385Sales 32,347 17,786 18,424 18,781 19,903Total Assets 17,867 18,300 14,127 12,461 12,673Raw 2002 2003 2004 2005 20060.2347 0.1508 0.3525 0.3162 0.24900.1577 0.0944 0.0575 0.0411 0.07280.0620 0.0432 0.0929 0.1266 0.15170.3942 0.8036 1.5370 1.7857 2.20991.8104 0.9719 1.3042 1.5072 1.5705Weighted 2002 2003 2004 2005 20060.2817 0.1809 0.4230 0.3794 0.29880.2207 0.1322 0.0805 0.0575 0.10190.2045 0.1425 0.3065 0.4176 0.50050.2365 0.4822 0.9222 1.0714 1.32591.8104 0.9719 1.3042 1.5072 1.5705Z-score 2.7539 1.9096 3.0363 3.4332 3.7976149
References1. Dillard’s Website: www.dillards.com2006 Annual Report2002 10K -2007 10K2. JC Penney Website: www.jcpenney.com2006 Annual Report2002 10K -2007 10K3. Kohl’s Website: www.kohls.com2006 Annual Report2002 10K -2007 10K4. Stage Stores Website: www.stagestores.com2006 Annual Report2002 10K -2007 10K5. Stein Mart Website: www.steinmart.com2006 Annual Report2002 10K -2007 10K6. Capital Resources: www.cr-ny.com7. First Research: www.firstresearch.com8. Google Finance: www.finance.google.com9. Investopedia: www.investopedia.com10. Market Watch: www.marketwatch.com11. MSN Money: http://moneycentral.msn.com12. NetMBA: www.netmba.com13. Reuters: www.reuters.com14. St. Louis Federal Reserve Bank: www.stlouisfed.org/fred0215. Wall Street Journal: http://online.wsj.com16. Yahoo Finance: www.finance.yahoo.com150
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J. C. Penney Company, Inc. Equity V
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Industry AnalysisIn 1902, James Cas
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Financial Analysis, Forecast Financ
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Business & Industry AnalysisCompany
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Industry OverviewThe retail industr
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Five Forces ModelThe Five Forces Mo
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ConcentrationThe level of concentra
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capable of offering lower prices th
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If a firm wishes to shut down, it m
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Legal BarriersMany industries have
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These costs include issues such as
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Bargaining Power of SuppliersThe de
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The relative bargaining power of th
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Competitive StrategiesIn order to a
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Department stores have to focus on
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The Big PicturePlayers in this indu
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Lower Input CostsJ. C. Penney is at
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in the last five years. This trend
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convenient for different consumers
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transactions have been improperly s
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Penney does state in its annual rep
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Operating and Capital LeasesOperati
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Potential Accounting FlexibilityA f
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truly are. J. C. Penney, however, h
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Qualitative Analysis of DisclosureT
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we can see why targeting the strong
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manipulation diagnostics for J. C.
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Net Sales/Net Accounts ReceivableNe
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Net Sales/Unearned Revenue1200Net S
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Below is a chart of sales manipulat
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As for the industry, all the compan
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Pension Expense/SG&APension Expense
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Below is a chart of all expense man
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discount rates in respect to pensio
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Financial Analysis, Forecast Financ
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paying off their short-term obligat
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ecause many firms in this segment o
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Penney’s inventory turnover is in
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ConclusionAnalysis through liquidit
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operating efficiency because the fi
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Return on AssetsReturn on Assets0.1
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Capital Structure AnalysisWhen look
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however, in 2006, J. C. Penney show
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Sustainable Growth RateSustainable
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average of only years 2005 and 2006
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(reported in millions)Annual Income
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We then began to look at the equity
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Common Size Balance Sheet 2002 2003
Page 100 and 101: (numbers in millions)Statement of C
Page 102 and 103: ConclusionOverall, it appears that
Page 104 and 105: Inc. We set these averages equal to
Page 106 and 107: Price to BookPPS BPS P/B IndustryAv
Page 108 and 109: Price Earnings GrowthPPS EPS PEG In
Page 110 and 111: y J. C. Penney’s EBITDA. Then we
Page 112 and 113: Regression Analysis3 Month Rate 72
Page 114 and 115: Intrinsic ValuationsIntrinsic valua
Page 116 and 117: amount in the eye’s of shareholde
Page 118 and 119: This particular stock price in our
Page 120 and 121: esidual income or converge. Future
Page 122 and 123: To find our long run return on equi
Page 124 and 125: Sensitivity AnalysisGrowth Rates0 -
Page 126 and 127: for this large difference between s
Page 128 and 129: Analyst RecommendationAfter careful
Page 130 and 131: AppendixLiquidity RatiosCurrent rat
Page 132 and 133: Capital Structure RatioDebt to equi
Page 134 and 135: SUMMARY OUTPUT3 Month Regression72
Page 136 and 137: SUMMARY OUTPUT6 Month Regression72
Page 138 and 139: SUMMARY OUTPUT2 Year Regression72 M
Page 140 and 141: SUMMARY OUTPUT5 Year Regression72 M
Page 142 and 143: SUMMARY OUTPUT10 Year Regression72
Page 144 and 145: Cost of Equity 0.1361Estimated Pric
Page 146 and 147: Discount Dividends Model0 1 2 3 4 5
Page 148 and 149: Residual Income Model WACC(AT) 0.07
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J. C. Penney Company, Inc. Equity Valuation and Analysis As of ...

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