Macy’s ($M) is set to report its fourth quarter financial results after the Market closes on Tuesday (2/23). Last Quarter, the department store chain reported a 5.2% fall in year-over-year sales due to lower spending on apparel and accessories by both domestic customers as well as international tourist. Investors and analysts are worried that unfavorable warm weather caused sales in cold weather-related merchandise to decline during this past holiday season. Wall Street is anticipating Macy’s ($M) to announce earnings of $ 1.88 per share and revenue of $ 8.8 Billion for the quarter.
Fundamental Analysis
One of the greatest benefits from SprinkleBit Premium is access to the Analyzer. We populated the analyzer with Macy’s ($M) main competitors in the apparel and accessory department store industry to project how its financial fundamentals compare to its peers. Lets take a look at how Macy’s ($M) compare against Nordstrom ($JWN), Kohl’s ($KSS), Target ($TGT), Dillard’s ($DDS) and JC Penny ($JCP). For this analysis we used EBITDA multiplies, revenue multiples, market cap to revenue, market cap to total assets and PE in order to see how Macy’s ($M) measures up against it peers. By running the fundamental measures in comparison to the competition, we received an implied share price of $ 49.22. With the current trading price of $ 40.22 (EOD 2/19) Macy’s ($M) is undervalued with 23.22%.
Technical Analysis
Macy’s is not know to make big moves on the release of earnings, but we still analyzed the technicals on the daily chart in order to see where the stock price could potentially move to. With an entry price of $40.22 and a reported loss on earnings, the stock has the potential to fall to $ 39.00 for a 3.03% loss. With an entry price of $40.22 and a reported beat on earnings, the stock has the potential to rise to $ 41.50 for a 3.18% gain. The risk/reward ratio for this trade is 1.05.
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