Mk Restaurant Group
M
$23.74
-0.50%
Macy's Inc. is a legacy American omnichannel department store operator, running roughly 430 namesake Macy's stores, about 60 Bloomingdale's full-price and outlet locations, and approximately 170 freestanding Bluemercury beauty specialty shops, alongside e-commerce platforms and international licensing arrangements in the UAE and Kuwait. The company is a mid-tier anchor of the U.S. mall ecosystem rather than a growth disruptor, with women's apparel, accessories, shoes, cosmetics and fragrances accounting for roughly 64% of net retail sales and a workforce of about 90,000 employees. The current investor debate centers on whether management's turnaround — a Q1 fiscal 2026 beat that lifted full-year guidance, per Investing.com coverage, and a Q2 showing revenue up 1.2% year-over-year with net income of $169 million — represents durable margin and merchandising improvement or merely a low-bar recovery in a structurally challenged category. Sentiment remains deeply split: sell-side coverage skews neutral-to-cautious (UBS at Sell, BTIG and Citigroup at Neutral) even as the stock has outperformed the S&P 500 by more than 16 percentage points over the past year, and macro crosscurrents such as oil above $100 and rising Treasury yields add consumer-spending risk to the narrative.…
M
Mk Restaurant Group
$23.74
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Investment Opinion: Should I buy M Today?
Rating: Hold. The core thesis is that Macy's offers deep value on cash flow (27%+ FCF yield) and a credible earnings inflection, but the stock has already run past the consensus target of $23.10 and lacks analyst conviction, with a 'hold' consensus and a mean rating of 2.92. The risk/reward is balanced rather than compelling at $24.10.
Supporting evidence: the stock trades at 8.45x trailing PE and 0.24x PS, near the bottom of its historical range (PS 0.54x-1.29x); revenue growth has inflected to +1.2% YoY in Q2 from prior contraction; Q2 net income nearly doubled to $169 million on operating leverage; TTM free cash flow of $1.491 billion covers the 3.64% dividend with a 30.7% payout ratio; and the PEG ratio of 0.657 suggests the market is paying well under one times growth. However, the average analyst target of $23.10 implies -4.1% downside, and the target range of $10-$30 signals high uncertainty.
Risks and conditions: the biggest risks are margin compression (Q2 gross margin fell sequentially to 39.63%), consumer recession risk from oil above $100 and rising yields, and the possibility that the valuation discount is a rational reflection of secular decline. This Hold would upgrade to Buy if Q3 results validate the guidance raise and gross margins hold above 40%, or if the stock pulls back toward the $20.50 support level. It would downgrade to Sell if revenue growth decelerates below 1% or gross margins fall below 38%. Valuation verdict: the stock is cheap relative to its own history and peers, but fairly valued to slightly expensive relative to the analyst consensus target.
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M 12-Month Price Forecast
Macy's presents a balanced risk/reward at $24.10: the 27%+ FCF yield and earnings inflection are compelling, but the stock has already surpassed the consensus target and lacks analyst conviction. The base case (50% probability) sees the stock range-bound around $22-$24 as the market awaits evidence of durable growth. An upgrade to bullish would require Q3 results validating the guidance raise and gross margins holding above 40%; a downgrade to bearish would follow revenue deceleration below 1% or margin compression below 38%. The wide analyst target range of $10-$30 underscores high uncertainty, and the stock's high beta means macro developments will disproportionately affect the outcome.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Mk Restaurant Group's 12-month outlook, with a consensus price target around $23.10 and implied upside of -2.7% versus the current price.
Average Target
$23.10
0 analysts
Implied Upside
-2.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$10 - $30
Analyst target range
Coverage is moderate with 10 analysts, and the consensus is tepid: the recommendation is "hold" with a mean rating of 2.92 on a scale where 3.0 is neutral, and an average target price of $23.10 — implying roughly -4.1% downside from the current $24.10, meaning the stock has already run past the consensus fair value. The distribution skews cautious, with recent actions showing UBS reiterating Sell (August 26), Citigroup and BTIG maintaining Neutral (August 25 and September 11), and TD Cowen, Telsey, Evercore ISI and JP Morgan all at Hold/Market Perform/In Line/Neutral through the spring and summer — no recent upgrades are visible in the institutional ratings data, which is a meaningful signal that the rally has outpaced analyst conviction. Consensus EPS estimates of $2.49 (range $2.37-$2.61) and revenue estimates of $20.58 billion (range $18.27-$22.04 billion) imply modest expectations, and the fact that the stock trades above the average target suggests either analysts are lagging the price action or the market is ahead of itself. The target range is extremely wide — $10.00 low to $30.00 high, a 3x spread — which signals high uncertainty and low conviction rather than a tight clustering around fair value. The $30 high target would require roughly 24% upside from here and likely assumes successful turnaround execution, gross-margin recovery toward the 40%+ level, multiple expansion from 0.24x PS toward historical norms, and continued FCF strength supporting buybacks and dividends; the $10 low target implies a 58% decline and prices in margin compression, renewed traffic deterioration, consumer recession risk (amplified by oil above $100 and rising yields), and a return to the earnings volatility that produced the 118x PE quarter in fiscal 2025. With the average target below the current price and a wide dispersion, the analyst community is effectively saying the easy money has been made; the stock's next leg depends on Q3 results validating the guidance raise rather than on multiple expansion alone.
Bulls vs Bears: M Investment Factors
The bear case currently has stronger evidence in the near term: the stock trades above the consensus target of $23.10, the recommendation is 'hold' with a mean rating of 2.92, and no recent upgrades are visible. However, the bull case is supported by a compelling 27%+ FCF yield, a clear earnings inflection (Q2 net income nearly doubled), and a valuation near historical lows. The single most important tension is whether the 1-2% revenue growth and margin improvement prove durable enough to justify a re-rating from 0.24x PS toward historical norms, or whether the discount is a rational reflection of secular mall-traffic decline. Resolving this depends on Q3 results validating the guidance raise and sustaining gross margins above 39%.
Bullish
- Deep value on cash flow: TTM free cash flow of $1.491 billion against a $5.42 billion market cap implies a free-cash-flow yield above 27%, the single most compelling datapoint in the thesis. This cash generation comfortably covers the 3.64% dividend (payout ratio 30.7%) and is funding the turnaround internally rather than through external financing.
- Earnings inflection with operating leverage: Q2 fiscal 2026 net income nearly doubled to $169 million from $87 million a year earlier on revenue growth of just 1.2%, demonstrating meaningful operating leverage. Q1 also beat with revenue up roughly 2.1% to $4.892 billion and management raised full-year guidance, lending credibility to the turnaround.
- Valuation near historical lows: At 0.24x PS and 8.45x trailing PE, the stock sits well below its own historical PS range of 0.54x-1.29x and near the bottom of its PE band. The PEG ratio of 0.657 and EV/EBITDA of 5.10x suggest the market is pricing in little optimism, leaving room for multiple re-rating if growth proves durable.
- Momentum and relative strength: The stock has gained 29.29% over the past year versus 13.13% for the S&P 500, a relative-strength spread of +16.16 points, and is up 8.36% in the past month against a -1.02% decline for the index. The September pullback to $20.50 was bought aggressively, and the stock sits at roughly 73% of its 52-week range, indicating a sustained uptrend.
Bearish
- Analyst consensus implies downside: The average analyst target of $23.10 is roughly 4.1% below the current $24.10, and the consensus recommendation is 'hold' with a mean rating of 2.92. Recent actions include UBS reiterating Sell and Citigroup/BTIG maintaining Neutral, with no visible upgrades, suggesting the rally has outpaced analyst conviction.
- Thin margins and structural pressure: Trailing net margin of 2.84% and operating margin of 4.55% are typical-to-weak for department stores, and Q2 gross margin compressed sequentially to 39.63% from 41.54% in Q1, possibly reflecting promotional intensity. ROE of 13.21% is flattered by leverage (equity multiplier above 3x) rather than strong returns on assets of just 3.51%.
- Leveraged balance sheet: Debt-to-equity of 1.07 and a current ratio of 1.49 indicate a serviceable but leveraged balance sheet. Interest expense of $23 million in Q2 and $25 million in Q1 consumes a meaningful share of operating income, and the company's thin net margin leaves little cushion if consumer spending weakens.
- Macro headwinds for consumer spending: Oil above $100 and rising Treasury yields are reigniting inflation and rate fears, pressuring equity valuations and favoring energy and value over growth. With a beta of 1.465, Macy's is roughly 47% more volatile than the market, making it vulnerable to sector rotation and consumer recession risk.
M Technical Analysis
Macy's is in a sustained, choppy uptrend: the stock has gained 29.29% over the past year versus 13.13% for the S&P 500 (relative strength of +16.16 points), and at $24.10 it sits at roughly 73% of its 52-week range of $16.69 to $26.59 — closer to the highs than the lows but not extended, implying momentum with room before overbought territory. The 6-month gain of 19.90% and YTD advance of 5.93% confirm the longer-term recovery structure, though the YTD figure lags the S&P's 11.45% (relative strength YTD of -5.52), meaning most of the outperformance was earned in the second half of the trailing year rather than the calendar year to date. Short-term momentum is clearly accelerating: the stock is up 8.36% over the past month against a -1.02% decline for the S&P 500, a +9.38 point relative-strength spread, and up 3.08% over three months versus +2.85% for the index — a sharp re-acceleration after the September pullback to $20.50 on September 10. That September dip (a roughly 20% drawdown from the August high of $26.21) followed by the October rebound to $24.10 suggests buyers defended the low-$20s, and the 1-month/1-year alignment (both positive) argues against a trend reversal, though the modest 3-month gain of 3.08% shows the advance has been stair-stepped rather than linear. Key resistance sits at the 52-week high of $26.59, roughly 10% above the current price; a breakout there would confirm the multi-quarter base and likely invite momentum and value funds alike, while support rests at the 52-week low of $16.69 (about 31% below current levels) with an intermediate shelf near $20.50-$21.00 where the September selloff found footing. With a beta of 1.465, Macy's is roughly 47% more volatile than the market, and a maximum drawdown of -29.94% over the period underscores that position sizing must account for violent swings — the short ratio of 4.82 days-to-cover also means short-covering can amplify rallies, but the same crowded short base can accelerate downside on any guidance disappointment.
Beta
1.47
1.47x market volatility
Max Drawdown
-29.9%
Largest decline past year
52-Week Range
$17-$27
Price range past year
Annual Return
+20.5%
Cumulative gain past year
| Period | M Return | S&P 500 |
|---|---|---|
| 1m | +3.2% | +0.9% |
| 3m | -4.8% | +4.1% |
| 6m | +20.6% | +7.2% |
| 1y | +20.5% | +12.4% |
| ytd | +4.4% | +13.3% |
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M Fundamental Analysis
Revenue is stabilizing rather than compounding: Q2 fiscal 2026 revenue of $5.059 billion grew 1.2% year-over-year against $4.999 billion in Q2 fiscal 2025, following Q1's $4.892 billion (up from $4.793 billion, roughly +2.1%) and a seasonally dominant Q4 of $7.916 billion — a marked improvement from the prior-year Q4 of $8.007 billion, which declined. The multi-quarter arc shows the top line inflecting from contraction to low-single-digit growth, and segment data explains the mix: women's accessories, shoes, cosmetics and fragrances at $1.986 billion and women's apparel at $1.109 billion dominate, with men's and kids at $1.048 billion, home at $723 million, and smaller but higher-margin credit card revenue of $156 million and Macy's Media Network revenue of $37 million. Growth of 1-2% is not a re-rating catalyst on its own, but it validates the turnaround thesis and, combined with cost discipline, is enough to drive meaningful earnings leverage given the company's thin net margin. Profitability is real but thin: Q2 net income of $169 million on a 3.34% net margin and 39.63% gross margin, with operating income of $251 million (4.96% operating margin) and EBITDA of $456 million (9.01% margin), while Q1 net income was only $63 million (1.29% net margin) on a 41.54% gross margin. The sequential gross-margin compression from Q1's 41.54% to Q2's 39.63% is worth watching — it may reflect promotional intensity or mix — but the year-over-year comparison is favorable, with Q2 fiscal 2025 net income of just $87 million (1.74% margin) on a 41.99% gross margin, meaning net income nearly doubled on flat-ish sales. Trailing metrics of 2.84% net margin, 4.55% operating margin and 36.55% gross margin are typical-to-weak for department stores, and ROE of 13.21% is flattered by leverage (equity multiplier above 3x) rather than by strong returns on assets, which sit at just 3.51%. The balance sheet is serviceable but leveraged: debt-to-equity of 1.07, a current ratio of 1.49, and TTM free cash flow of $1.491 billion against a $5.42 billion market cap — a free-cash-flow yield north of 27%, which is the single most compelling fundamental datapoint here and comfortably covers the 3.64% dividend yield (payout ratio of 30.7%). Cash generation is seasonal and lumpy — Q4 fiscal 2025 produced $1.159 billion of FCF while Q3 fiscal 2025 was negative $101 million and Q1 fiscal 2026 generated $204 million — so investors should judge the company on the full-year cycle, but the TTM FCF figure and $1.298 billion cash balance indicate the turnaround is being funded internally rather than through external financing, materially lowering financial risk despite the elevated leverage ratio.
Quarterly Revenue
$5.1B
2026-08
Revenue YoY Growth
+1.2%
YoY Comparison
Gross Margin
39.6%
Latest Quarter
Free Cash Flow
$1.5B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is M Overvalued?
Because Macy's is profitable (Q2 net income of $169 million; trailing EPS of $0.119 and forward EPS estimates near $2.49), the PE ratio is the appropriate primary metric, and the picture is starkly cheap: trailing PE of 8.45x against a forward PE of 10.16x — an unusual inversion where the forward multiple exceeds the trailing one, reflecting the depressed trailing earnings base (the $0.119 TTM EPS is distorted by weak prior quarters) rather than market skepticism about growth. On the forward estimate of roughly $2.49, the stock trades at about 9.7x, and the PEG ratio of 0.657 signals the market is paying well under one times growth; the 0.24x PS ratio and 0.44x EV/Sales are characteristic of a low-margin, high-turn retailer rather than a distressed asset. Against department-store peers, Macy's looks inexpensive on most measures: EV/EBITDA of 5.10x and P/B of 1.11x are near the low end of the retail range, while the 3.64% dividend yield and 3.79x price-to-cash-flow provide income and asset-backed support. The premium/discount question is really one of quality: a 0.24x PS multiple versus a sector where healthy retailers often command 0.5x-1.0x implies the market is discounting structural decline, and the roughly 27% FCF yield suggests either deep value or a value trap depending on whether the 1-2% revenue growth proves durable. Historically, Macy's own valuation band has been wide and volatile: PE ratios in the historical data range from 2.68x (Q4 fiscal 2025) to 118.55x (Q3 fiscal 2025, on near-zero earnings), with PS ratios ranging from 0.54x to 1.29x over the past several years. At 0.24x PS and 8.45x trailing PE, the stock sits near the bottom of its own historical range — the Q2 fiscal 2026 historical PS of 1.29x and PE of 9.70x are the closest comparables, and the current PS is well below even the depressed 0.68x-0.69x levels seen through fiscal 2025. That positioning suggests the market is pricing in little optimism; either the turnaround re-rates the multiple toward its historical mid-band (a meaningful upside case) or the discount persists as a rational reflection of secular mall-traffic decline.
PE
8.4x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 3x~38x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
5.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on thin margins and a leveraged balance sheet. Trailing net margin of 2.84% and operating margin of 4.55% leave little cushion for error, and Q2 gross margin compressed sequentially to 39.63% from 41.54% in Q1, possibly reflecting promotional intensity. Debt-to-equity of 1.07 and interest expense of $23 million in Q2 consume a meaningful share of operating income, while ROE of 13.21% is flattered by leverage rather than strong returns on assets of 3.51%. Revenue concentration in women's apparel, accessories, shoes, cosmetics and fragrances (roughly 64% of net retail sales) adds category-specific risk.
Market and competitive risks include valuation compression and macro sensitivity. The stock trades at 0.24x PS, well below its historical range of 0.54x-1.29x, but the discount may persist if secular mall-traffic decline continues. With a beta of 1.465, Macy's is roughly 47% more volatile than the market, and oil above $100 plus rising Treasury yields are reigniting inflation and rate fears that pressure consumer discretionary spending. Competitive disruption from off-price retailers and e-commerce, plus a wide analyst target range of $10-$30, signals low conviction and vulnerability to sector rotation.
Worst-case scenario: a consumer recession driven by persistent inflation and high rates would compress margins and renew traffic deterioration, causing earnings to revert toward the volatility that produced a 118x PE quarter in fiscal 2025. In this scenario, the stock could fall to the 52-week low of $16.69, a decline of roughly 31% from the current $24.10, or toward the analyst low target of $10.00, a 58% decline. The maximum drawdown over the period was -29.94%, underscoring that position sizing must account for violent swings.
FAQ
The most severe risk is financial: thin net margins of 2.84% and debt-to-equity of 1.07 leave little cushion, and Q2 gross margin compressed sequentially to 39.63% from 41.54%. Competitive risk comes from off-price retailers and e-commerce, which could accelerate mall-traffic decline. Macro risk is significant given the 1.465 beta, with oil above $100 and rising Treasury yields threatening consumer spending. Company-specific risk includes the wide analyst target range of $10-$30, signaling low conviction, and the possibility that the turnaround stalls, pushing the stock toward the $16.69 52-week low (a 31% decline) or the $10 bear-case target (a 58% decline).
The 12-month forecast has three scenarios: a base case (50% probability) of $22-$24, aligned with the analyst average target of $23.10, assuming modest 1-2% revenue growth and stable margins; a bull case (25% probability) of $28-$30, requiring successful turnaround execution, gross margin recovery above 40%, and multiple expansion; and a bear case (25% probability) of $16.69-$20.00, driven by a consumer recession and margin compression. The base case is most likely, with the key assumption that revenue growth remains positive and gross margins hold around 39-40%. The wide target range of $10-$30 reflects high uncertainty.
Macy's appears undervalued on most metrics relative to its own history and peers. The stock trades at 8.45x trailing PE, 0.24x PS, and 5.10x EV/EBITDA, all near the bottom of its historical range (PS 0.54x-1.29x). The PEG ratio of 0.657 suggests the market is paying well under one times growth, and the 27%+ FCF yield is exceptionally high. However, the market may be rationally discounting secular decline in department stores, and the stock trades above the analyst average target of $23.10. The valuation implies the market expects little growth, so any positive surprise could trigger a re-rating, but the discount may persist if fundamentals deteriorate.
From a risk/reward perspective, Macy's is a balanced proposition rather than a compelling buy at $24.10. The stock trades above the analyst average target of $23.10 (implying -4.1% downside), and the consensus recommendation is 'hold' with a mean rating of 2.92. However, the 27%+ free-cash-flow yield and a PEG ratio of 0.657 provide strong fundamental support, and Q2 net income nearly doubled to $169 million. The biggest downside risk is a consumer recession that could push the stock toward the 52-week low of $16.69, a 31% decline. It is a good buy for value investors with a medium-term horizon who can tolerate volatility, particularly on pullbacks toward the $20.50 support level, but not for those seeking immediate upside or low volatility.
Macy's is better suited for medium-to-long-term value investors than short-term traders, given its high beta of 1.465 and maximum drawdown of -29.94%. The 3.64% dividend yield and 27%+ FCF yield provide income and support for a buy-and-hold approach, but the lack of analyst conviction and secular industry headwinds mean earnings visibility is low. Short-term trading is risky due to violent swings and the crowded short base (4.82 days-to-cover). A suggested minimum holding period is 12-18 months to allow the turnaround to prove durable and for potential multiple re-rating, with position sizing that accounts for the stock's volatility.