Macy's Inc. - Value

The mighty American department store was left for dead in the Great Recession but the crisis brought out much needed changes which have resurrected the sector. Macy's Inc. (M) is expected to grow earnings by 41% in fiscal 2010.

The Holidays Were Good

Macy's operates 850 Macy's and Bloomingdale's stores in 45 states. On Jan 6, the company reported December same-store sales rose 3.9%. Total sales for the holiday month rose 4.5% to $4.6 billion.

For the entire November/December holiday period, same-store sales rose 4.6%.

The company kept the momentum it had seen earlier in the year. Through the year to date, total sales were up 6.6% to $22.2 billion and same-store sales climbed 4.7%.

Online sales also continued to be a hot component of total sales as they jumped 28.4% in December and were up 28.8% year-to-date in 2010.

Guidance Reaffirmed for Q4

Fourth quarter same-store sales are still expected in the range of 3.5% to 4.5% with earnings projected to be between $1.44 and $1.49 per share.

For fiscal 2010, earnings are expected between $1.96 and $2.01 per share. The company is scheduled to report results on Feb 22.

Zacks Consensus Estimates have been moving in the last few months. The fiscal 2010 Zacks Consensus has fallen by 2 cents to $1.98 in the last 30 days.

Fiscal 2011 Zacks Consensus Estimate has risen 5 cents to $2.23 per share in the last 90 days although 1 estimate has been revised higher and 2 lower in the last 30 days. This is earnings growth of 12.6%.

Macy's has surprised 3 out of the last 4 quarters by a whopping average of 66%.

Macy's Is Cheap

Macy's is trading with a forward P/E of just 11.8, which is well under its peers like Dillards (DDS), trading at 17.6x.

It also has an attractive price-to-book ratio of 2.1 and a low price-to-sales ratio of just 0.4.

As an added bonus, Macy's pays a dividend yielding 0.9%.

Macy's is a Zacks #2 Rank (buy) stock.

Shares have pulled back off their 6 month highs recently.

Read the Apr 28, 2010 article.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

 
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