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Macy's (M) Gains But Lags Market: What You Should Know

PRA Group (PRAA) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

In the latest trading session, Macy's (M) closed at $34.35, marking a +0.38% move from the previous day. This move lagged the S&P 500's daily gain of 1.09%. Elsewhere, the Dow gained 1.13%, while the tech-heavy Nasdaq added 1.51%.

Prior to today's trading, shares of the department store operator had lost 1.07% over the past month. This has lagged the Retail-Wholesale sector's gain of 3.9% and the S&P 500's gain of 1.92% in that time.

Wall Street will be looking for positivity from M as it approaches its next earnings report date. This is expected to be February 26, 2019. On that day, M is projected to report earnings of $2.76 per share, which would represent a year-over-year decline of 2.13%. Our most recent consensus estimate is calling for quarterly revenue of $8.56 billion, down 1.22% from the year-ago period.

M's full-year Zacks Consensus Estimates are calling for earnings of $4.21 per share and revenue of $25 billion. These results would represent year-over-year changes of +11.67% and +0.64%, respectively.

Investors should also note any recent changes to analyst estimates for M. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 3.77% higher. M is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note M's current valuation metrics, including its Forward P/E ratio of 8.13. Its industry sports an average Forward P/E of 12.12, so we one might conclude that M is trading at a discount comparatively.

It is also worth noting that M currently has a PEG ratio of 0.96. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Regional Department Stores was holding an average PEG ratio of 1.23 at yesterday's closing price.

The Retail - Regional Department Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 195, which puts it in the bottom 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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