Of the 23 analysts covering Macy’s (M), 13 of them, or 56.5%, have given a “hold” recommendation. Two analysts have given a “sell” recommendation, and eight a “buy” recommendation. As of December 21, 2015, Macy’s was trading at a price of $35.02, down 46.7% from the start of the year. As of December 21, analysts have a 12-month target price expectation of $45.25 for Macy’s, which reflects an upside of 29.2% from the current price.
As of December 21, Macy’s was trading at a forward PE (price-to-earnings) ratio of 8.4x. The company’s valuation has declined by 41.1% since the beginning of the year.
Peers Nordstrom (JWN), Kohl’s (KSS), and Dillard’s (DDS) were trading at higher valuation multiples of 14.8x, 10.1x, and 9.3x, respectively, as of December 21. Macy’s is also trading at lower valuations compared to the S&P 500 Consumer Discretionary Index with a forward PE of 18.3x and the S&P 500 Index with a forward PE of 16.5x. Macy’s constitutes 0.4% of the Vanguard Consumer Discretionary ETF (VCR) and 0.2% of the iShares Russell Mid-Cap ETF (IWR).
Fiscal 2015 expectations
Macy’s fiscal 2015 will end on January 30, 2016. The company lowered its sales and earnings guidance in November 2015. It expects 2015 total sales to decline by 2.7% to 3.1% compared to the previous guidance of a 1% decline in total sales.
The company expects its fiscal 2015 diluted EPS (earnings per share) to come in at $4.20–$4.30, excluding asset impairment charges associated with planned store closings. This reflects a downgrade from the company’s previous EPS guidance of $4.70–$4.80. The company’s fiscal 2015 guidance includes gains from asset sales, including ~$60 million from the sale of real estate in Seattle and a $250 million gain on the sale of real estate in downtown Brooklyn. Analysts expect Macy’s fiscal 2015 adjusted EPS to decline by 4.1%–$4.22.
Macy’s has been under pressure to monetize its real estate. In November 2015, the company stated that it has currently decided not to pursue the formation of an REIT, as it doesn’t offer enough value creation.
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