Boston, MA 10/07/2013 (wallstreetpr) – Shares of J.C. Penney Company, Inc. (NYSE:JCP) is up 0.89% and trading at $7.92. The 52-week price range of company’s stock stood at $7.76 to $27.00.
The company recently touched a 31-year low of $7.82. This speaks of the long term prospects that the investors have had about the company’s stock. Some investors have also factored in bankruptcy as the only option left for the company now. Perhaps the market has overreacted to all the bad news at the company. This could account for the plunge in the share prices, more than what the actual price of the company may be.
The fact that one of the most reputed credit rating agencies, Fitch, has, in its report, issued a CCC “junk” rating report on the stock has been the reason for such a plunge in share prices. The shares have been downgraded directly from B grade before. It is this sudden downgrading that is the main reason behind panic in the market, which has led to the shares of the company losing as much as 6.54% in a single day. The rating agency has cited mismanagement in the company’s cash reserves as the main reason behind such downgrading. The company had been reckless in spending cash, which has been more than expected. This is coupled by the fact that JCP is aiming to raise $96.6 million cash in share offers. The current rating issued to the company may make the current endeavor for the company difficult to raise money publicly. This is despite the retailer write-offs and a need to raise additional cash before 2013 end.
The company has a pessimistic prospect about its future, which has slipped by 55% in valuation on a year-to-date basis. Recently, even Goldman Sachs has assigned an “underperform rating to the company, which has cited a poor financial base of the company as the main reason. The company has also not effectively faced its competitors, which has hurt its revenue generating capacity.
