Macy's, Inc. (M) stock analysis

P/E above its 5-year median

Macy's's P/E of 9.1 is above its own 5-year median of 8.0.

P/E below the industry

Macy's's P/E of 9.1 is below the General Merchandise Stores median of 21.9.

EV/EBITDA above its 5-year median

Macy's's EV/EBITDA of 3.8 is above its 5-year median of 3.7.

P/B below the industry

Macy's's price-to-book of 1.32 is below the General Merchandise Stores median of 4.67.

Trading below fair value

The share price of $24.85 is below our fair value estimate of $46.11.

Margin of safety over 20%

The price is 46.1% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -3.9% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -17.2% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing slower than the industry

Revenue grew 0.3% over the last twelve months; the General Merchandise Stores median is 8.6%.

Guidance raised

Macy's raised its annual fiscal year 2026 Net sales outlook on Sep 10, 2026.

Gross margin improving

Gross margin was 40.7% over the last twelve months, against 40.3% a year earlier.

Return on equity over 15%

Return on equity was 16.0% over the last twelve months and averaged 20.8% over five years.

Return on capital over 10%

Return on invested capital was 14.1%, above the 10% that usually covers the cost of capital.

Return on equity below the industry

Macy's's return on equity of 16.0% is below the General Merchandise Stores median of 24.9%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 3.3% over the last twelve months, against a 5-year average of 3.1%.

Net margin below the industry

Macy's's net margin of 3.3% is below the General Merchandise Stores median of 4.0%.

High debt

Debt is 49.4% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 190% five years ago to 49.4%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 72.4% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.59 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.23; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Macy's paid dividends worth 3.1% of the share price over the last twelve months.

Yield below Treasuries

The 3.1% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Macy's yields 3.1%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 8 fiscal years.

Covered by earnings

Dividends take 26.4% of net income.

Covered by free cash flow

Dividends take 14.0% of free cash flow.