Macy’s (NYSE:M)
Although Macy’s (NYSE:M) acknowledged problems for the rest of the year, the company comforted investors last week with an earnings report that topped Wall Street’s expectations. But stocks are still down for 2022 as worries about stockpile problems, inflationary pressures, and the prospect of a recession weigh on investors’ minds.
Can Macy’s (NYSE:M) overcome apprehensions about the industry and provide a window of opportunity for shoppers?
What Do We Learn From Macy’s Second-Quarter Financial Results?
Overall, Macy’s (NYSE:M) second quarter performance was lackluster. The store’s latest quarterly results were better than expected, but its prognosis for the year was reduced.
The department store company beat second-quarter earnings projections by $0.12. With a top line of $5.6 billion, M surpassed expectations by beating by $100 million. Around one percent less than the previous year’s total.
Macy’s (NYSE:M) reduced its outlook for net sales from $24.34B to $24.58B. The company has previously predicted a range of $24.46B to $24.7B. Revenue projections had been projected to be revised downward by analysts, who now expect $24.4B in adjusted earnings.
Macy’s (NYSE:M) projected adjusted diluted EPS of $4.00 to $4.20 for the upcoming financial year. This estimate was lower than the $4.58 predicted by industry experts and the lower end of the previous range of $4.53 to $4.95.
Although the forecast was cautious, the retailer’s stock did rise once the quarterly results were announced. A 1.5% stock price increase occurred during the report’s release after the trading session.
Despite the recent gain, shares are still down significantly year to date. For 2022, M has plummeted by more than 30 percent. After hitting a 52-week low of $15.85 on Friday, the stock has risen to roughly $18.20 in Monday’s trade. A 52-week high of $37.95 was hit in November.
Not only is Macy’s struggling in 2022, but so are many other department store chains. Since the close of 2021, shares of both Kohl’s (KSS) and Nordstrom (JWN) have dropped by almost 40% and 25%, respectively. In contrast, Dillard’s (DDS) has increased by roughly 20% this year due to a rise in price that began around the middle of July.
Should You Buy M?
Despite Macy’s (NYSE:M) widespread popularity, Wall Street is taking the department store chain with extreme caution. Nine of Seeking Alpha’s 17 analysts rate the stock as a Hold. Meanwhile, three market watchers have rated M as a Strong Buy, and two have rated it as a Buy.
Considering the worst scenario, one analyst rated Macy’s as a Strong Sell. A further two analysts rated the store as a Sell.
Evercore ISI is one firm that has a positive outlook on Macy’s (NYSE:M). According to Evercore ISI, the strength of shopping for special occasions is expected to continue, giving Macy’s a +50% upside.
The quantitative information rating system used by Seeking Alpha has Macy’s (NYSE:M) pegged as a Hold, suggesting that investors should proceed with caution. Stock value, growth, and profitability have all graded an A-. A D for momentum, though, helps to balance things out.
Enterprising Investors, a bullish contributor to Seeking Alpha, rates Macy’s as a Strong Buy because the stock is undervalued by the market due to fears of a recession. According to the analyst, the corporation has shown it can weather economic downturns in 2009 and 2020.
Another Seeking Alpha contributor, DM Martins Research, takes a more cautious approach. The analyst said that the company’s sales and comparables held up well in the most recent earnings release but that margins had decreased due to inventory problems and pricing difficulties. M’s volatility has led DM Martins Research to keep its hold recommendation on the company.
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Author Shariq Khan 