Bear: Craig Sterling, managing director, EVA Dimensions

I can go back 20 years and count on one hand the number of retail companies that have destroyed as much shareholder value as J.C. Penney (JCP) has. None of them recovered. The average EVA margin — a company’s true economic profit net of operating and capital costs — was 1.6% for U.S. companies last year, and within retail the median was 1.4%. J.C. Penney’s was -14%. J.C. Penney makes Hewlett-Packard (HPQ) look good, even Sears — and that’s hard to do. Kohl’s (KSS) and Macy’s (M) are not going to just sit back and let J.C. Penney win over their customers. Even if Penney hits revenue targets, at a recent price of $14 the stock is still overvalued based on EVA profits. This company is destroying economic profits at historic proportions. Long-term investors should not go anywhere near the stock.

Bull: Rick Snyder, senior retail analyst, Maxim Group

The big thing is that Mike Ullman is back as CEO, replacing Ron Johnson. Nobody knows J.C. Penney’s core customers better, and that’s crucial considering Penney has spent the past year essentially trying to fire them. Ullman has brought discounts back. As we walk through the stores, we’re seeing lines at the cash register that were nonexistent last year. Penney doesn’t even need to convince all its former customers to return, because one good thing Johnson did was leave behind a leaner cost structure, trimming $900 million out of selling and administrative expenses. In 2014 we predict that revenue will grow by 8% and the company will earn 56¢ a share, as opposed to losing $2.70 a share this year. We have a price target of $27.

This story is from the September 2, 2013 issue of Fortune.