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

Zacks Equity Research

Macy's (M) closed the most recent trading day at $15.67, moving -1.2% from the previous trading session. This change lagged the S&P 500's 0.29% gain on the day. At the same time, the Dow added 0.17%, and the tech-heavy Nasdaq gained 0.19%.

Prior to today's trading, shares of the department store operator had gained 3.93% over the past month. This has outpaced the Retail-Wholesale sector's loss of 0.13% and the S&P 500's gain of 0.32% in that time.

M will be looking to display strength as it nears its next earnings release, which is expected to be November 21, 2019. On that day, M is projected to report earnings of $0.04 per share, which would represent a year-over-year decline of 85.19%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.35 billion, down 0.97% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.86 per share and revenue of $24.84 billion. These totals would mark changes of -31.58% and -0.51%, respectively, from last 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 remained stagnant. M is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, M is currently trading at a Forward P/E ratio of 5.55. Its industry sports an average Forward P/E of 10.12, so we one might conclude that M is trading at a discount comparatively.

Meanwhile, M's PEG ratio is currently 0.74. 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. M's industry had an average PEG ratio of 0.88 as of yesterday's close.

The Retail - Regional Department Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 189, putting it in the bottom 26% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

To follow M in the coming trading sessions, be sure to utilize Zacks.com.


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