Macy's (M) AI Stock Analysis

• Market Cap: $3.59B
• Dividend Yield: 5.38%
• Average Volume (3M): 7.23M
• Price to Earnings (P/E): 6.7
• Beta (1Y): 1.16
• Revenue Growth: -3.77%
• EPS Growth: 4607.98%
• Country: US
• Employees: 94,189
• Sector: Consumer Cyclical
• Sector Strength: 80
• Industry: Department Stores
• EPS (TTM): 0.16
• Shares Outstanding: 271,539,520
• 10 Day Avg. Volume: 6,757,263
• 30 Day Avg. Volume: 7,226,946
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 2.25
• Enterprise Value/Revenue: 0.35
• Enterprise Value/Gross Profit: 0.88
• Enterprise Value/Ebitda: 4.68
• 1Y Price Target: $11.75
• Price Target Upside: -11.19% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 77 Outperform
• Price Target: $15.00 ▲(13.38% Upside)

Macy's overall stock score reflects a strong valuation with a low P/E ratio and high dividend yield, indicating potential undervaluation. Technical analysis supports positive momentum. Financial performance shows challenges with profitability and cash flow, but the earnings call provided some positive surprises in key metrics.

Positive Factors

Earnings

Macy's reported a stronger-than-expected earnings per share for the first quarter, surpassing market expectations.

Product and Experience Improvements

Management noted momentum built in March and April attributed to improvements in product and experience, with further improvement expected.

Stock Price Target

The price target for Macy's stock has been raised from $11.00 to $13.00.

Negative Factors

Earnings Guidance

Management lowered the full-year earnings outlook, citing a challenging retail environment and the impact of tariffs.

Foot Traffic

Foot traffic to Macy’s stores decelerated significantly in recent months, indicating a potential challenge in attracting customers.

Sales Performance

According to Citi credit card data, the Department Store category experienced a notable slowdown in sales, which could impact Macy's performance.

Macy's Business Overview & Revenue Model

Company Description

Macy's, Inc., an omni-channel retail organization, operates stores, Websites, and mobile applications. The company sells a range of merchandise, such as apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. As of January 29, 2022, it operated 725 department stores in the District of Columbia, Puerto Rico, and Guam under the Macy's, Macy's Backstage, Market by Macy's, Bloomingdale's, Bloomingdale's The Outlet, Bloomies, and bluemercury brands. It also operates in Dubai, the United Arab Emirates, and Al Zahra, Kuwait under the license agreements. The company also operates as a beauty products and spa retailer. The company was formerly known as Federated Department Stores, Inc. and changed its name to Macy's, Inc. in June 2007. Macy's, Inc. was founded in 1830 and is based in New York, New York.

How the Company Makes Money

Macy's generates revenue primarily through the sale of merchandise in its department stores and online. The company's revenue streams include full-price sales, clearance sales, and off-price sales through its Backstage stores. A significant portion of its earnings comes from apparel and accessories, which encompass clothing, footwear, and handbags. Macy's also benefits from its private label brands, which provide higher margins compared to national brands. In addition to retail sales, Macy's earns revenue through strategic partnerships, promotional events, and loyalty programs that drive customer engagement. The company's real estate assets, including owned and leased properties, contribute to its financial stability, and the ability to leverage its physical locations for distribution and fulfillment enhances its overall revenue potential.

Macy's Financial Statement Overview

Summary

Macy's financial statements indicate challenges with declining net profit margins and revenue growth. The balance sheet shows moderate leverage but declining ROE. Cash flow management is mixed, with strong operating cash flow but reduced free cash flow.

Income Statement

Macy's income statement shows a moderate performance with stable gross profit margins around 40% over recent periods. However, the net profit margin has decreased from 6.0% to 2.4% in TTM, indicating pressure on net profitability. Revenue growth has declined recently, with a decrease from previous periods. EBIT and EBITDA margins have also seen a decline, reflecting operational challenges. Overall, the income statement presents a mixed picture with profitability concerns.

Balance Sheet

The balance sheet reflects a moderate financial position with a debt-to-equity ratio of approximately 1.27 in TTM, indicating a reasonable leverage level. Return on Equity (ROE) has decreased from 39.5% to 12.5%, showing reduced efficiency in generating returns for shareholders. The equity ratio stands at 27.7%, suggesting a stable but not overly conservative capital structure. While there is a solid equity base, declining ROE is a concern.

Cash Flow

Cash flow analysis reveals a decline in free cash flow from $760M to $369M, marking a significant reduction in free cash flow growth rate. Operating cash flow to net income ratio remains robust at 1.94, indicating strong cash generation relative to net income. However, the free cash flow to net income ratio has decreased, reflecting reduced cash flow efficiency. Cash flow management shows some strengths but highlights a need for improvement in free cash flow generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	22.80B	23.01B	23.87B	25.45B	25.40B	18.10B
Gross Profit	9.21B	9.27B	9.64B	10.10B	10.44B	5.81B
EBITDA	1.73B	1.76B	1.07B	2.50B	3.00B	-3.54B
Net Income	558.00M	582.00M	45.00M	1.15B	1.43B	-3.94B
Balance Sheet
Total Assets	16.09B	16.40B	16.25B	16.87B	17.59B	17.71B
Cash, Cash Equivalents and Short-Term Investments	932.00M	1.31B	1.03B	862.00M	1.71B	1.68B
Total Debt	5.66B	6.07B	6.34B	6.40B	6.83B	8.04B
Total Liabilities	11.64B	11.85B	12.11B	12.78B	13.97B	15.15B
Stockholders Equity	4.45B	4.55B	4.14B	4.08B	3.62B	2.55B
Cash Flow
Free Cash Flow	369.00M	760.00M	312.00M	320.00M	2.12B	183.00M
Operating Cash Flow	1.08B	1.28B	1.30B	1.61B	2.71B	649.00M
Investing Cash Flow	-508.00M	-592.00M	-913.00M	-1.17B	-370.00M	-325.00M
Financing Cash Flow	-521.00M	-413.00M	-220.00M	-1.30B	-2.38B	699.00M

Macy's Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 13.23
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For M, the sentiment is Positive. The current price of 13.23 is above the 20-day moving average (MA) of 12.83, above the 50-day MA of 12.47, and below the 200-day MA of 13.25, indicating a neutral trend. The MACD of 0.26 indicates Negative momentum. The RSI at 55.20 is Neutral, neither overbought nor oversold. The STOCH value of 64.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for M.

Macy's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
M	77 Outperform	$3.59B	6.69	12.92%	5.38%	-3.77%	4607.98%
KSS	77 Outperform	$1.69B	8.19	5.36%	8.30%	-7.23%	-27.81%
DDS	77 Outperform	$8.32B	14.69	29.76%	4.88%	-2.44%	-10.73%
AEO	74 Outperform	$2.24B	13.24	12.19%	3.86%	-0.95%	-10.51%
URBN	71 Outperform	$6.01B	13.12	19.72%	―	9.63%	56.06%
Sector *	61 Neutral	$17.67B	14.34	-5.25%	3.04%	1.27%	-14.70%
JWN	60 Neutral		―		―	2.20%	120.00%

Macy's Corporate Events

Macy’s Issues $500 Million in Senior Notes

On July 29, 2025, Macy’s Retail Holdings, LLC, a subsidiary of Macy’s, Inc., issued $500 million in senior notes due 2033 in a private offering to qualified institutional buyers. The proceeds are intended to fund a tender offer for outstanding senior notes and debentures, redeem approximately $587 million of other outstanding notes, and cover related fees and expenses. Additionally, Macy’s announced the early tender results and upsizing of its tender offer to repurchase up to $250 million of its outstanding notes, increasing the maximum amount from $175 million to $250 million. The tender offer, which had an early settlement date of July 29, 2025, saw all validly tendered notes accepted for purchase, with no notes accepted after the early tender date.

Macy’s Announces $500 Million Senior Notes Offering

On July 14, 2025, Macy’s, Inc. announced that its subsidiary, Macy’s Retail Holdings, LLC, priced a $500 million offering of 7.375% senior notes due 2033. The proceeds from this offering will be used to fund a tender offer, redeem outstanding senior notes, and cover related expenses. The closing of this offering is expected on July 29, 2025, and is crucial for the company’s financial restructuring efforts, impacting its debt management strategy.

Macy’s Announces $500 Million Senior Notes Offering

On July 14, 2025, Macy’s, Inc. announced that its subsidiary, Macy’s Retail Holdings, LLC, plans to offer $500 million in senior notes due 2033 in a private offering. The proceeds from this offering, along with cash on hand, will be used to fund a tender offer to repurchase certain outstanding senior notes and debentures, redeem approximately $587 million of other outstanding notes, and cover related expenses. This financial maneuver is part of Macy’s strategy to manage its debt and optimize its financial structure, potentially impacting its market positioning and stakeholder interests.

Macy’s Holds Virtual Annual Shareholders Meeting

On May 16, 2025, Macy’s, Inc. held its annual shareholders meeting virtually, where several key decisions were made. Shareholders approved the election of 13 directors for a one-year term, ratified the appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year ending January 31, 2026, and approved the advisory vote on executive officer compensation.