The company's business has been hit hard by the credit collapse and continued slump in real estate market. Recently, the company was able to avert bankruptcy by amending $365 million of secured credit facilities, extending their maturities to Sept. 30, 2010, and eliminating all mark-to-market provisions. The outstanding balances under the facilities on May 15 stood at $148.6 million with Bank of America, $70.8 million with Deutsche Bank and $145.9 million with Morgan Stanley. With the amendment, the new interest rate on the facilities will be the greater of 30-day LIBOR plus 3.5 percent or 5.5 percent. It came as a big relief for the company as the arrangement eliminated mark-to-market provisions and the right to make future margin calls. Also, existing scheduled amortization payments were replaced with cash management requirements. Additionally, the company received an extension on another smaller facility until June 30th, which had been breached, with a subsidiary of its parent company, BlackRock (NYSE: BLK).

The company still remains profitable. The company recently reported net income available to common stockholders for the first quarter of 2009 of 27 cents a share, compared to 75 cents a share in the same quarter last year. Operating Earnings for the first quarters of 2009 and 2008 were $0.07 and $0.37 per share, respectively to common stockholders.

As far as the balance sheet is concerned, the company has a cash and cash equivalent of 847.51 million and debt of 1.88 billion. The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 7.41 and PEG ratio (5 yr expected) of 0.87. The stock remains an attractive opportunity for those investors who are interested in high risk high reward company.

The stock is covered by four analysts who all rate it a Hold.

J. C. Penney Company Inc. (NYSE: JCP) operates a network of department stores in the United States, Alaska, and Puerto Rico and primarily offers family apparel and footwear, accessories, fine and fashion jewelry, beauty products, and home furnishings.

Last week the company said that   its first-quarter profit tumbled 79% to $25 million, or 11 cents a share, from $120 million, or 54 cents a share, from the prior year period. Pension expenses hurt earnings by 32 cents a share. Quarterly sales dropped 5.9% to $3.88 billion.

Looking ahead, the company expects to post a loss in the range of 15 cents to 25 cents a share in second quarter. Second quarter revenue is expected to decline in the range of 7% to 10%. Analysts on an average currently expect a loss of 9 cents per share. For full year 2009, the company anticipates profit in the range of 50 cents to 65 cents a share, and same-store sales to fall about 9 percent.

The company has struggled amid poor consumer spending and weak retail environment and in the past few months had to give substantial markdowns in order to clear out this excess inventory. The discounts squeezed out the company's profit margins.

Looking at the balance sheet, the company has currently 2.14 billion in cash and cash equivalents and 3.51 billion in debt. The company's stock currently trades at a forward P/E (fye 31-Jan-11) of 23.33 and PEG ratio (5 yr expected) of 4.12 and hence seems overvalued at current levels.

Of the nine Wall Street analysts who follow the stock, one rates it a Strong Buy, one rates it a Moderate Buy while four recommend Hold. One tags it as Moderate Sell while two others rate it a Strong Sell.

Disclosure: Author does not own any of the stocks discussed here.