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Macy's (M) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

Macy's (M) closed at $20.32 in the latest trading session, marking a -0.59% move from the prior day. This change lagged the S&P 500's daily gain of 1.88%. At the same time, the Dow added 1.43%, and the tech-heavy Nasdaq gained 2.24%.

Heading into today, shares of the department store operator had lost 3.49% over the past month, outpacing the Retail-Wholesale sector's loss of 4.01% and lagging the S&P 500's loss of 3.48% 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 August 14, 2019. In that report, analysts expect M to post earnings of $0.46 per share. This would mark a year-over-year decline of 22.03%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.63 billion, up 1.02% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.11 per share and revenue of $25.10 billion, which would represent changes of -25.6% and +0.53%, respectively, from the prior year.

Any recent changes to analyst estimates for M should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.37% lower. M is holding a Zacks Rank of #4 (Sell) right now.

In terms of valuation, M is currently trading at a Forward P/E ratio of 6.58. This represents a discount compared to its industry's average Forward P/E of 9.53.

Also, we should mention that M has a PEG ratio of 0.88. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Regional Department Stores was holding an average PEG ratio of 0.95 at yesterday's closing price.

The Retail - Regional Department Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 240, putting it in the bottom 7% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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