Macy's (M) Stock Sinks As Market Gains: Here's Why

Macy's (M) stock recently declined 1.89% to $12.96, trailing broader market gains, despite a 9.63% monthly appreciation. Ahead of its September 3, 2025 earnings report, analysts anticipate significant year-over-year declines, with EPS projected down 64.15% to $0.19 and revenue down 3.93% to $4.74 billion, alongside full-year estimates showing similar negative trends. Despite these forecasts, Macy's maintains a Zacks Rank #3 (Hold), has seen a 1.57% increase in its consensus EPS estimate over the past month, and trades at a forward P/E of 7.29, a notable discount to its industry average of 16.34 within a top-ranked retail sector.

Analysis

Macy's (M) presents a conflicting profile for investors, characterized by recent stock outperformance juxtaposed with a deteriorating fundamental outlook. Despite a single-day decline of 1.89%, the stock has appreciated 9.63% over the past month, significantly outpacing both the S&P 500 and the broader Retail-Wholesale sector. However, forward-looking consensus estimates for its upcoming earnings report project a severe contraction, with expected earnings per share of $0.19 representing a 64.15% year-over-year decline and revenue forecasted to drop 3.93% to $4.74 billion. This negative trend is anticipated to persist for the full fiscal year, with projected declines of 31.44% in earnings and 4.52% in revenue. Mitigating these concerns are a modest 1.57% upward revision in the consensus EPS estimate over the past month and a compelling valuation. Macy's trades at a forward P/E of 7.29, a steep discount to the industry average of 16.34. Furthermore, the company operates within a highly-ranked industry group, which is in the top 15% of over 250 industries, suggesting potential sector-wide strength. The current Zacks Rank of #3 (Hold) reflects this balance of a low valuation against significant operational headwinds.

Key Decisions for Investors

• Investors should treat the recent 9.63% monthly stock appreciation with caution, as it contrasts sharply with forecasts for a significant year-over-year earnings decline of 64.15% in the upcoming quarter.
• The stock's discounted forward P/E of 7.29 relative to the industry's 16.34 suggests considerable pessimism is already priced in, which may appeal to value-focused investors willing to look past the weak near-term outlook.
• Closely monitor for further changes in analyst EPS estimates, as the recent 1.57% positive revision could be an early indicator of improving short-term business trends ahead of the official earnings disclosure.
• Given the conflicting signals of strong recent momentum versus weak forward estimates, a neutral or hold position is justifiable until the upcoming earnings report on September 3, 2025 provides greater clarity on the company's trajectory.