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

Macy's (M) recently closed down 1.23% at $12.88, lagging the S&P 500 and its Retail-Wholesale sector over the past month. The department store operator is projected to report significant declines in its upcoming earnings on September 3, 2025, with consensus estimates for EPS at $0.19 (down 64.15% year-over-year) and revenue at $4.74 billion (down 4.02% year-over-year), alongside similar full-year forecasts. Despite these negative projections, the Zacks Consensus EPS estimate has seen a 1.57% increase over the last 30 days, and the stock trades at a discounted forward P/E of 7.2 compared to its industry average of 16.96, contributing to its current Zacks Rank of #3 (Hold).

Analysis

Macy's (M) is exhibiting significant underperformance relative to broader market indices and its sector, having lagged the S&P 500's daily change and the Retail-Wholesale sector's monthly gain of 3.1%. The fundamental outlook appears challenged, with consensus estimates for the upcoming quarter projecting a severe 64.15% year-over-year decline in EPS to $0.19 and a 4.02% revenue decrease to $4.74 billion. This negative trend is expected to persist for the full fiscal year, with forecasts indicating a 31.44% drop in earnings and a 4.57% fall in revenue. Despite these headwinds, there are countervailing signals; the Zacks Consensus EPS estimate has risen 1.57% in the last 30 days, a metric associated with positive future stock performance. Furthermore, the stock trades at a compelling valuation with a forward P/E ratio of 7.2, representing a steep discount to its industry's average of 16.96. This blend of a weak operational forecast, recent positive estimate revisions, and a low valuation culminates in a neutral Zacks Rank of #3 (Hold), indicating that the market has priced in much of the near-term risk.

Key Decisions for Investors

• Given the conflicting signals of a deeply discounted valuation versus sharply negative forward-looking guidance, a neutral or 'Hold' position is warranted until the company provides more clarity in its upcoming earnings report.
• Investors should closely monitor the September 3, 2025 earnings release, as any performance exceeding the significantly lowered EPS expectation of $0.19 could serve as a positive catalyst for the undervalued stock.
• The primary risk is a continuation of fundamental decay; therefore, any further downward revisions to full-year earnings or revenue estimates would be a strong bearish signal, potentially negating the current valuation argument.