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JCP - J.C. Penney: Declining Department Store Multiples Hamper Its Value
J.C. Penney Company Inc.
I've been encountering some questions about my belief that J.C. Penney's (JCP) common stock may only have an intrinsic value of around $1 even if it gets close to $1 billion EBITDA.
The reasons for this belief are that J.C. Penney's debt burden is quite large and department stores in general have seen their EV/EBITDA valuation multiples decline significantly (around a 35% decline since 2014). Thus, in a 2014 environment, J.C. Penney could be given an enterprise value of $5.5 billion with $1 billion EBITDA, leaving around $5 to $6 in share