Tomahawk, WI 8/11/2013 (Basicsmedia) – Many are the times when a company may see its stock being upgraded or downgraded. This depends on a plethora of factors, some of which are internal and others external. The company whose stock is being downgraded or upgraded may have no ability to alter the factors which are responsible for this action. Downgrading can never be positive, it is always a negative change which affects a company’s security or stock. In this article, we’ll examine the factors which are responsible for the change in the fortunes of J.C. Penney Company Inc. (NYSE:JCP) stock, and determine whether there is hope.

Factors Responsible for Downgrading J. C. Penney’s Stock

J. C. Penney stock is just like any other company’s. It has to face competition from other players in the market. Whenever there appears to be fundamental and material changes in terms of how the company’s operations are carried out, the stock can and will suffer from activities such as downgrading. When there are similar changes in the future outlook of the company or the industry is also faced with a scenario which is not so pleasant and may affect businesses negatively, there would be no problem in terms of downgrading the stock as well.

J. C. Penney stock downgrade has been done by Citi Bank. JCP is undergoing a period of upheavals where it looks like every piece of news coming out of this company is negative. There is no hiding the fact that J. C. Penney has to contend with struggles which are unfortunately putting its future at great risk. Currently, it seems as if there is no end to the string of depressing news, and it would take a very optimistic person to forecast an upturn in J. C. Penney fortunes going forward. Citi is unconvinced as to whether J. C. Penney has done enough to reassure investors of its viability.

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The image shows J. C. Penney negative MRQ sales growth compared to others. Image is from www.seekingalpha.com

If J. C. Penney stock has to be upgraded, then the management has the duty of stabilizing the ship. If you need answers to this issue, you would need to look at its latest financial results and make up your own mind. According to me, J. C. Penney has fallen short of taking decisive steps meant to curtail the losses it has been reporting. It is pretty hard to tell with any degree of certainty whether J. C. Penney will enjoy better returns in the next quarter or not, because the message coming out from its headquarters appears to suggest otherwise. I wouldn’t blame Citi for downgrading its stock.

Should J. C. Penney Investors Sell?

It would require a very optimistic and faith filled individual to ignore the advice issued by Citi to sell. This is what I would also recommend to its investors, regardless of how much sentimental value you hold for the company. The fact that some suppliers continue issuing J. C. Penney with what it needs to provide its services and keep its doors open to its customers, isn’t reason enough for investors to disregard the advice to sell their stock. As an investor, your biggest task is to protect your investments, and this is also what I’d ask you to do with the shares you hold at J. C. Penney.

Citi downgraded J. C. Penney stock after thorough examination. I would ask you not to disregard what it has stated, but to examine it carefully, after going through J. C. Penney financial results with a fine toothcomb.

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