What Happened: Shares of department store chain Macy’s (NYSE:M) jumped 5.6% in the morning session after a day after the company reported an impressive "beat and raise" quarter. Third quarter results significantly blew past analysts' EPS expectations, driven in part by same-store sales and revenue beats. Full year guidance was also raised slightly across the board, from same-store sales to revenue to EPS, demonstrating confidence in its holiday season strategy amid macroeconomic challenges.
Today's rally is also benefitting from solid earnings reports from apparel retailers, including Ross Stores (NASDAQ:ROST) and Gap. Ross Stores reported third quarter results with revenue outperforming Wall Street's estimates, driven by better-than-expected same-store sales growth and more new store openings. Gross margin also exceeded expectations.
Likewise, Gap reported third quarter results that blew past analysts' revenue and EPS expectations, although its revenue declined in absolute terms. These beats were driven by better-than-expected same-store sales performance (analysts forecasted a 7% decline, and Gap posted a 2% decline).
Moreover, the stock's attractiveness is bolstered by a compelling valuation, with a forward P/E ratio of less than 10x and an appealing dividend yield of nearly 5%. This combination may be enticing for investors looking for value and income opportunities. Additionally, the nearly 12% short interest in Macy's (NYSE:M) has likely led to short covering, with investors who initially bet against the stock either reducing or abandoning their positions.
Is now the time to buy Macy's? Find out by reading the original article on StockStory.
What is the market telling us: Macy's's shares are very volatile and over the last year have had 18 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was one day ago, when the stock gained 11.5% on the news that the company reported an impressive "beat and raise" quarter. Third quarter results significantly blew past analysts' EPS expectations, driven in part by same-store sales and revenue beats. Full year guidance was also raised slightly across the board, from same-store sales to revenue to EPS, demonstrating confidence in its holiday season strategy amid macroeconomic challenges. The company is focused on utilizing data science tools for inventory management, along with strategic clearance markdowns and promotions as it prepares to meet demand in the coming quarters. Zooming out, we think this was a great quarter that shareholders will appreciate.
Macy's is down 29.2% since the beginning of the year, and at $14.25 per share it is trading 41.7% below its 52-week high of $24.46 from February 2023. Investors who bought $1,000 worth of Macy's's shares 5 years ago would now be looking at an investment worth $430.77.
