Macy's (M) Declines More Than Market: Some Information for Investors

Macy's (M) recently underperformed the broader market, with its stock down 1.23% in the latest session and trailing sector gains over the past month. The department store operator faces significant headwinds, as consensus estimates for its September 2025 earnings project a 64.15% year-over-year EPS decline to $0.19 and a 4.02% revenue decrease. Despite a recent 1.57% upward revision in Zacks Consensus EPS estimates and a "Hold" rating, Macy's trades at a forward P/E of 7.2, a substantial discount to its industry average of 16.96, indicating a potential value proposition amidst its operational challenges.

Analysis

Macy's (M) is exhibiting significant market underperformance and faces a challenging fundamental outlook. The stock's recent 1.23% decline outpaced the S&P 500's 0.24% loss, and its 0.23% gain over the past month substantially trails the 3.1% gain of the Retail-Wholesale sector. This weakness is underpinned by bleak forward-looking estimates, with consensus for the upcoming quarter projecting a 64.15% year-over-year collapse in EPS to $0.19 and a 4.02% revenue decline to $4.74 billion. The full-year forecast echoes this negative trend, with expected earnings and revenue contractions of 31.44% and 4.57%, respectively. Despite this, there is a minor positive signal in the 1.57% upward revision to the consensus EPS estimate over the last 30 days. From a valuation perspective, Macy's trades at a forward P/E of 7.2, a steep discount to its industry's average of 16.96, suggesting that much of the negative news is already priced in. The company's #3 (Hold) Zacks Rank within a relatively strong industry (top 14%) encapsulates this conflict between severe operational headwinds and a potentially discounted valuation.

Key Decisions for Investors

• Given the severe projected declines in earnings and revenue, investors should treat Macy's as a high-risk holding and monitor the upcoming earnings release on September 3, 2025, as a critical catalyst.
• The stock's forward P/E of 7.2, a significant discount to its industry average, may appeal to value investors who are willing to look past the current negative consensus if they anticipate any positive deviation from the low expectations.
• Considering the stock's pronounced underperformance relative to its sector and the broader market, investors should weigh the potential for a value trap against the possibility of a turnaround, with the recent modest upward EPS estimate revision being a key short-term indicator to watch.