Macy's, Inc. M has been one of the retail sector's – and the market's – top performers (at least in terms of consistent upside trajectory) for quite a while now.
The big bet by institutions has been on the affluent consumer continuing to pump their cash into stores like Macy's, Nordstrom and Tiffany as well as the luxury car dealers.
However, while Macy's has yet to show signs of weakness, some of their peers have shown some cracks in their technical foundation already.
Does Macy's simply run a better operation than these other chains?
What the bulls see in Macy's
Some cheap valuation metrics:
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- An enterprise value of $29.2 billion versus a market capitalization of only $23.2 billion
- A price-to-sales ratio of 0.83
- 5.33% net profit margins that spin off over $1.6 billion in positive levered free cash flow annually
- A return-on-assets ratio of 8.37%
- A return-on-equity ratio of 26.44%
- A good short-term balance sheet picture as evidenced by the current ratio of 1.52
- An attractive 2.1% dividend yield
- A rather expensive looking price-to-book ratio of 4.50
- Total cash of only $1.51 billion versus total debt of $7.34 billion – but this could simply be a matter of borrowing cheap to sell merchandise at a nice profit.
- Total debt-to-equity ratio of 140.89%
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