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GuruFocus has detected 2 Warning Signs with JC Penney Co Inc $JCP.
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JC Penney Co Inc (NYSE:JCP)
Retained Earnings
$0 Mil (As of Jan. 2017)

Retained earnings is the accumulated portion of net income that is not distributed to shareholders. JC Penney Co Inc's retained earnings for the quarter that ended in Jan. 2017 was $0 Mil.

JC Penney Co Inc's quarterly retained earnings declined from Jul. 2016 ($-3,131 Mil) to Oct. 2016 ($-3,198 Mil) but then increased from Oct. 2016 ($-3,198 Mil) to Jan. 2017 ($0 Mil).

JC Penney Co Inc's annual retained earnings declined from Jan. 2015 ($-2,494 Mil) to Jan. 2016 ($-3,007 Mil) but then increased from Jan. 2016 ($-3,007 Mil) to Jan. 2017 ($0 Mil).


Definition

Retained Earnings is the accumulated portion of net income that is not distributed to shareholders. Because the net income was not distributed to shareholders, shareholders’ equity is increased by the same amount.

Of course, if a company loses, it is called retained losses, or accumulated losses.


Explanation

Historically profitable companies sometimes have negative retained earnings. This is because they have cumulatively paid out more to shareholders than they reported in profits.

For example, in 2011, Microsoft had negative retained earnings. This does not mean the company lost more money than it made over the years. It just means it paid out more money than it earned.

If a company has negative retained earnings, investors should check the 10-year financial results. They should not assume that negative retained earnings prove a company has generally lost money in the past.

Of course, many companies with negative retained earnings have indeed lost money in the past.

Retained Earnings: Warren Buffett’s Secret.

One of the most important indicators of durable competitive advantage. Net earnings can be paid out as dividends, used to buy back shares or retained for growth.

If the company loses more than it has accumulated, retained earnings is negative.

If a company isn’t adding to its retained earnings, it isn’t growing its net worth.

Rate of growth of retained earnings is good indicator whether it’s benefiting from a competitive advantage.

Microsoft is negative because it chose to buyback stock and pay dividends.

The more earnings retained, the faster it grows and increases growth rate for future earnings.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

JC Penney Co Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
Retained Earnings 1,5401,9592,0232,2221,412380-1,008-2,494-3,0070

JC Penney Co Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
Retained Earnings -1,720-2,494-2,644-2,761-2,221-3,007-3,075-3,131-3,1980
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