Macy’s (M) caused a stir when it released its third-quarter earnings, beating analysts’ sales and earnings estimates by a sizable margin. Macy’s latest beat is a reversal from its second-quarter earnings, which missed analysts’ estimates by 7%.
Has Macy’s bounced back?
Macy’s Company Profile
Macy’s was founded in 1929 as Federated Department Stores Inc. Over the years, Macy’s has grown into a retail titan that brings in $27.7 billion in annual sales.
While Macy’s is best known for its namesake Macy’s stores, it also owns and operates Bloomingdale’s — in total Macy’s operates 840 department stores across 45 U.S. states and territories.
Macy’s Earnings Rundown
Macy’s announced that third-quarter profit improved 23% over last year. Macy’s reported a net income of $217 million, or 61 cents per share, outperforming analysts’ estimates of 50 cents per share. Meanwhile, Macy’s net sales for the quarter dropped 1% to $6.20 billion, missing analysts’ revenue estimates of $6.34 billion.
Macy’s also lowered its outlook for fiscal 2014 earnings to range from $4.25 to $4.35 per share, compared with the previous range of $4.40 to $4.50 earnings-per-share. Guidance for full-year same-store sales growth (excluding sales from licensed businesses) was decreased to a range of 0.7% to 1%.
Macy’s had previously expected full year same-store sales growth to be between 1.5% and 2%. Even so, Macy’s stock rose after the otherwise solid earnings report.
Macy’s Current Ratings
Over the past few months Macy’s has been pretty stable. With solid buying pressure, Macy’s earns a “B” for its Quantitative Grade. On the fundamentals front, Macy’s is a mixed bag. Macy’s shines when it comes to cash flow (A), return on equity (A) and operating margin growth (B).
However, when it comes to earnings growth (C), earnings momentum (C) and analyst earnings revisions (C), Macy’s grades are rather lackluster. Macy’s should focus on improving sales growth and earnings surprises, earning “D” and “F” grades in those categories. Overall, Macy’s earns a “C” for its total Fundamental Grade and is a “B-rated buy.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
