Critical Survey: Roundy's (RNDY) versus J.C. Penney (JCP)

Roundy's (NYSE: RNDY) and J.C. Penney (NYSE:JCP) are both small-cap cyclical consumer goods & services companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Roundy's and J.C. Penney, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Roundy's 0 0 0 0 N/A
J.C. Penney 2 17 1 0 1.95

J.C. Penney has a consensus target price of $4.86, suggesting a potential upside of 46.81%. Given J.C. Penney’s higher probable upside, analysts plainly believe J.C. Penney is more favorable than Roundy's.

Valuation and Earnings

This table compares Roundy's and J.C. Penney’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Roundy's N/A N/A N/A ($0.06) -60.00
J.C. Penney $12.55 billion 0.08 $1.00 million ($0.58) -5.71

J.C. Penney has higher revenue and earnings than Roundy's. Roundy's is trading at a lower price-to-earnings ratio than J.C. Penney, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Roundy's and J.C. Penney’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Roundy's -0.89% N/A -3.14%
J.C. Penney -1.43% 7.60% 1.04%

Risk & Volatility

Roundy's has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, J.C. Penney has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500.

Institutional and Insider Ownership

73.1% of J.C. Penney shares are held by institutional investors. 1.0% of J.C. Penney shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

J.C. Penney beats Roundy's on 7 of the 10 factors compared between the two stocks.

About Roundy's

Roundy’s, Inc. is a Midwest supermarket chain. The Company offers a range of products, stocking around 45,000 different items. Its stores sell nationally advertised brands, as well as products under the Roundy’s own-brand labels. Its products are classified into non-perishable, perishable and non-food. Non-perishable food categories include grocery, frozen and dairy products. Perishable categories include produce, meat, seafood, deli, bakery and floral. Non-food includes general merchandise, health and beauty care, pharmacy and alcohol. It classifies products into primary categories, including grocery, frozen and dairy; produce; meat and seafood; bakery; deli, cheese and prepared foods; floral; general merchandise; alcohol; pharmacy; and health and beauty care. Its retail operations consists of around 148 grocery stores, with 119 stores in Wisconsin operating under the Pick ‘n Save, Copps and Metro Market banners and 29 stores in Illinois operating under the Mariano’s banner.

About J.C. Penney

J. C. Penney Company, Inc. is a holding company. The Company’s business consists of selling merchandise and services to consumers through its department stores and its Website at jcpenney.com. Its department stores and Website generally serve the same type of customers, its Website offers virtually the same mix of merchandise as its store assortment and other categories, and its department stores generally accept returns from sales made in stores and through its Website. It fulfills online customer purchases by direct shipment to the customer from its distribution facilities and stores or from its suppliers’ warehouses and by in store customer pick up. The Company sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora inside JCPenney, home furnishings and appliances. In addition, its department stores provide its customers with services, such as styling salon, optical, portrait photography and custom decorating.

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