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Time to Buy Macy’s

Retailers usually depend on the holiday season to boost sales and bolster profits. However, the New York based retailer, Macy’s, (M) has increased its earnings quarter by quarter for just less than four years! With the holiday season approaching it may be time to buy Macy’s stock before block buster earnings drive the price even higher. Like many stocks Macy’s took a substantial hit in the market crash at the start of the Great Recession. In reality the time to buy Macy’s was when it fell below $7 a share in March of 2009. Since that time the 162 year old retailer has paid quarterly dividends without fail and has steadily boosted its stock price to the current $50 a share. Although the stock has grown nicely while much of the economy is still in the doldrums, is it time to buy Macy’s now or has that time passed? Part of fundamental analysis of stocks is simply to use history as a guide and the ability to grow quarter by quarter in a very competitive market niche. This speaks to the ability of Macy’s to grow its stock along with its business.

All About Macy’s

Macy’s was originally R. H. Macy & Co. and has operated its flagship store on Herald Square in New York City for over a century. It competes with the likes of Belk, Bon-Ton, Dillard’s, Nordstrom, Neiman Marcus, Lord & Taylor and Sacks Fifth Avenue. This is the company that has sponsored the annual Macy’s Thanksgiving Day Parade in New York City for 89 years. Analysis credits the company’s ability to read and stay ahead of popular culture and diverse merchandising for much of its success. Macy’s operates more than eight hundred stores in the USA and operates Bloomingdale’s as a separate division. From three hundred kiosk locations in malls across the country Macy’s sells consumer electronics. Currently Macy’s stock has a P/E ratio of 14.76 on 376 million shares. Earnings per share are $3.45. Macy’s has a $19 Billion market cap.

Is It Still Time to Buy Macy’s?

Finding a good stock investment depends on what you need to know about the stock and its market niche in order to invest intelligently. Let us look at retailing. Retail consumers can be fickle. Buyers for the likes of Macy’s need to know a year in advance that every child in the universe is going to want a Teen Age Mutant Ninja Turtle for Christmas and not a Teen Age Mutant Ninja Frog. If the company orders enough of these toys in time for the holidays it prospers. If it does not order enough or perhaps does not order any it misses out on sales and shoppers go to different stores. If it orders the wrong toy (Ninja frog) it makes no sales, has wasted money on useless merchandise, and customers flock to other stores for the hot toy (Ninja Turtle). Macy’s makes money because it and its buyers are able to stay tuned into popular culture regarding clothes, toys, cosmetics, etc., etc., etc. The ability to do this year after year after year builds a brand that people rely on and spend money on. Value based stock investing is investing in stocks that grow, stocks that pay, and stocks that last. To the extent that Macy’s can continue to predict trends and efficiently sell their products they will continue to prosper. If that is the case it is still time to buy Macy’s.

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