Macy's, Inc. (NYSE: M)

Sector: Consumer Cyclical Industry: Department Stores CIK: 0000794367
Market Cap 7.70 Bn
P/B 1.59
P/E 5.42
P/S 0.28
ROIC (Qtr) 16.65
Div Yield % 6.66
Rev 1y % (Qtr) 0.20
Total Debt (Qtr) 5.24 Bn
Debt/Equity (Qtr) 1.21
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About

Macy's, Inc., recognized in the stock market as M, is a prominent player in the retail industry, with its headquarters in New York City. The company's operations span across a diverse range of products and services, with a rich history dating back to 1830. Macy's has established a strong presence in the retail sector, offering a broad spectrum of products, including apparel and accessories for men, women, and children, cosmetics, home furnishings, and other consumer goods. The company's revenue generation is primarily driven by the sale of various...

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Investment thesis

Bull case

  • Strong tangible asset base of 15.81B provides 3.02x coverage of total debt 5.24B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 1.55B provides strong 26.36x coverage of stock compensation 59M, indicating sustainable incentive practices.
  • Operating cash flow of 1.55B provides exceptional 15.87x coverage of interest expenses 98M, showing strong debt service capability.
  • Robust tangible asset base of 15.81B provides 10.56x coverage of working capital 1.50B, indicating strong operational backing.
  • Free cash flow of 797M provides exceptional 8.13x coverage of interest expense 98M, showing strong debt service ability.

Bear case

  • Operating cash flow of 1.55B barely covers its investment activities of (562M), with a coverage ratio of -2.77, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 447M against inventory of 6.30B, the 0.07 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 1.55B provides thin coverage of dividend payments of (197M) with a -7.89 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 722M show weak coverage of depreciation charges of 896M, with a 0.81 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 797M represents just -1.72x of debt issuance (464M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Product and Service Breakdown of Revenue (2023)

Peer comparison

Companies in the Department Stores
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 DDS Dillard'S, Inc. 48.00 Bn 437.54 7.74 0.55 Bn
2 M Macy's, Inc. 7.70 Bn 5.42 0.28 5.24 Bn
3 KSS KOHLS Corp 4.95 Bn 4.67 0.26 6.80 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.79 4.23
EV to Cash from Ops. EV/CFO 5.71 30.77
EV to Debt EV to Debt 2.58 30.81
EV to EBIT EV/EBIT 5.17 76.95
EV to EBITDA EV/EBITDA 3.68 35.56
EV to Free Cash Flow [EV/FCF] EV/FCF 9.70 36.97
EV to Market Cap EV to Market Cap 1.76 1.47
EV to Revenue EV/Rev 0.49 2.92
Price to Book Value [P/B] P/B 1.59 7.91
Price to Earnings [P/E] P/E 5.42 149.21
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.43 1.94
Dividend Payout Ratio % Div Payout % (Qtr) 41.40 54.10
Dividend per Basic Share Div per Share (Qtr) 0.72 9.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 24.26 29.26
Interest Coverage Int. cover (Qtr) 7.37 -30.04
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 15.12 18.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 41.90 13.96
Dividend Growth (1y) % Div 1y % (Qtr) 4.96 -4.22
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 171.69 49.20
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 42.58 9.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 168.40 49.91
EBT Growth (1y) % EBT 1y % (Qtr) 321.62 99.18
EPS Growth (1y) % EPS 1y % (Qtr) 346.15 106.37
FCF Growth (1y) % FCF 1y % (Qtr) 255.80 127.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -3.18 -3.79
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.33 1.33
Cash Payout Ratio Cash Payout (Qtr) 0.09 0.19
Cash Ratio Cash Ratio (Qtr) 0.08 0.30
Current Ratio Curr Ratio (Qtr) 1.25 1.58
Debt to Equity Ratio Debt/Equity (Qtr) 1.21 1.07
Interest Cover Ratio Int Coverage (Qtr) 7.37 -30.04
Times Interest Earned Times Interest Earned (Qtr) 7.37 -30.04
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.10 9.63
EBIT Margin % EBIT Margin % (Qtr) 3.18 5.75
EBT Margin % EBT Margin % (Qtr) 2.75 5.00
Gross Margin % Gross Margin % (Qtr) 40.40 40.37
Net Profit Margin % Net Margin % (Qtr) 2.10 4.03