Time to eliminate Macy’s Inc. (NYSE:M) from your holding?


Macy’s and Nordstrom were the latest retailers to feel the burn of the struggle that brick and mortar retail chains have been feeling since online shopping has taken off. The two companies released their first quarter earnings reports on Thursday and neither one impressed Wall Street.

Given that Macy’s Inc. (NYSE:M) posted EPS of $2.00 in the last fiscal year and its stock now trading at $24.35, its P/E calculates to 12.16.

The P/E for the current year is 8.40. Investors should keep in mind that Macy’s, Inc.’s EPS for this year is expected to grow -38.10%% over the previous year’s EPS and price target for the next 12 months is estimates at $34.21.

Let?s look into the charts of the stock

The Barchart Technical Opinion rating is a 100% Sell with a Strongest short term outlook on maintaining the current direction. Longer term, the trend strength is Maximum. Long term indicators fully support a continuation of the trend.

The company has a dividend yield of 6.20%. Its dividend payout ratio is 73.90%. To decipher this, investors should keep in mind that a lower payout ratio implies that a company is only using a small fraction of its free cash to distribute to shareholders in form of dividends while retaining a large chunk of free cash for reinvestment in growth and other operating needs. Such prudent capital allocation ensures that a company is able to avoid cash crunch situations that can cripple its operations.

How much profit is Macy’s, Inc. squeezing from its operations? The company’s gross margin in the last fiscal year was 39.40%, operating margin was 5.10%, while net profit margin was 2.40%.

In the most recent quarter, the company squeezed gross profit of $2.99B from sales of 8.52B%, implying that costs of goods sold were $5.52B.

In terms of returns, Macy’s, Inc. posted return on equity of 15.20% and return on investment of 8.70%. Return on assets on the other hand was reported as 3.10%.

The company concluded the latest quarter with total assets of $21.16B and total liabilities of $16.84B. Its net operating cash flow in the latest quarter was $1.49B.

Macy’s, Inc. has a mixed stockholder ownership in the sense that insiders and institutional investors are involved in the stock. Insider ownership in the company stands at 0.30%. That compares with institutional ownership of 90.60%. The company has witnessed -3.06% insider transactions and -0.05% institutional transactions in the recent quarters.

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