Mk Restaurant Group
M
$23.41
-1.80%
Macy's Inc. is a leading American department store chain operating approximately 430 Macy's stores, 60 Bloomingdale's locations, and 170 Bluemercury beauty stores, alongside a robust e-commerce presence. As a legacy retail giant with over 160 years of history, it holds a distinct position in the consumer cyclical sector, competing with other national chains and online retailers. The current investor narrative centers on the company's turnaround strategy, which gained credibility after a Q1 2026 earnings beat and raised guidance, though skepticism persists regarding the sustainability of growth in a challenging retail environment. The stock has also attracted attention due to its significant price appreciation over the past year, driven by improving fundamentals and renewed consumer interest.…
M
Mk Restaurant Group
$23.41
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Investment Opinion: Should I buy M Today?
Based on the analysis, I rate Macy's as a Hold. The stock has strong momentum and is undervalued on a PE basis, but the analyst consensus target of $22.77 implies a -9.4% downside, and the modest growth outlook limits upside. The thesis is that Macy's is a turnaround play with improving fundamentals, but the risk-reward is balanced at current levels.
Supporting evidence includes a trailing PE of 8.45x versus the industry average of 15x, a PEG ratio of 0.66, and a 2.1% revenue growth rate. The company generates $1.5B in free cash flow and has a gross margin of 36.5%, indicating operational efficiency. However, the forward PE of 10.79x suggests earnings are expected to decline, and the average analyst target is below the current price, indicating limited upside.
The biggest risks are a slowdown in consumer spending, increased competition, and execution risks in the turnaround. If the stock's PE compresses below 7x or revenue growth decelerates below 1%, I would downgrade to Sell. Conversely, if the company sustains growth above 3% and the stock pulls back to $22, I would upgrade to Buy. Overall, Macy's is fairly valued relative to its history and peers, but the market is pricing in modest expectations, leaving little room for error.
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M 12-Month Price Forecast
The AI assessment is neutral, reflecting a balanced risk-reward profile. Macy's has shown improvement, but the market's expectations are modest, as evidenced by the Hold consensus and target below the current price. The stock's low valuation provides some downside support, but the lack of strong growth catalysts limits upside. I would upgrade to bullish if the company delivers sustained revenue growth above 3% and the stock pulls back to a more attractive entry point. Conversely, I would downgrade to bearish if the company misses earnings or guidance, or if macroeconomic conditions deteriorate significantly.
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 $22.77 and implied upside of -2.7% versus the current price.
Average Target
$22.77
0 analysts
Implied Upside
-2.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$9 - $30
Analyst target range
Macy's is covered by 11 analysts, with a consensus recommendation of 'Hold' (based on the mix of Hold/Neutral/In Line ratings). The average target price is $22.77, implying a downside of -9.4% from the current price of $25.13. The target range is wide, from a low of $9.00 to a high of $30.00, indicating high uncertainty about the company's future performance. The low target suggests concerns about potential margin compression or competitive losses, while the high target assumes successful execution of the turnaround strategy and continued growth. Recent ratings have been stable, with no major upgrades or downgrades, reflecting a cautious but not bearish stance from the analyst community.
Bulls vs Bears: M Investment Factors
Macy's presents a classic turnaround story with tangible progress, as evidenced by the Q1 beat and raised guidance, yet the market remains cautious, reflected in the Hold consensus and average target below the current price. The bull case is anchored in the stock's low valuation (PE 8.45x), strong momentum (+107.5% 1Y), and solid free cash flow, while the bear case highlights modest growth, high debt, and macro sensitivity. Currently, the bull case has slightly stronger evidence given the improving fundamentals and discounted valuation, but the key tension is whether the turnaround can sustain momentum in a challenging retail environment. If the company continues to beat expectations and grow revenue above 3%, the stock could re-rate higher; conversely, any stumble could trigger a sharp correction toward the 52-week low.
Bullish
- Turnaround gaining credibility: Q1 2026 revenue grew 2.1% YoY to $4.892B, beating expectations, and the company raised full-year guidance, providing tangible evidence the turnaround strategy is working. This beat has shifted some skepticism, as highlighted by Investing.com's analysis.
- Strong price momentum: The stock is up 107.5% over the past year, vastly outperforming the S&P 500's 21.5% gain. Trading near its 52-week high of $26.15, the market is rewarding the company's improving fundamentals and renewed consumer interest.
- Undervalued on earnings: With a trailing PE of 8.45x and forward PE of 10.79x, Macy's trades at a significant discount to the typical department store industry average of 15x. The PEG ratio of 0.66 suggests the stock is undervalued relative to its growth prospects.
- Healthy free cash flow: Free cash flow over the trailing twelve months is $1.502B, providing ample liquidity for debt reduction, dividends, and strategic investments. This supports the company's ability to execute its turnaround without financial strain.
Bearish
- Analyst consensus is Hold: The average analyst target price is $22.77, implying a downside of -9.4% from the current price of $25.13. With a consensus rating of 'Hold', analysts see limited upside and potential for a pullback after the recent rally.
- High uncertainty in targets: The analyst target range is extremely wide, from a low of $9.00 to a high of $30.00, reflecting deep uncertainty about the company's future. This wide dispersion suggests that outcomes could be dramatically different from current expectations.
- Modest growth profile: Revenue growth is low single-digit, with Q1 2026 up only 2.1% YoY. This is consistent with a mature department store facing structural challenges from e-commerce and changing consumer preferences, limiting upside potential.
- High debt levels: The debt-to-equity ratio stands at 1.07, indicating significant leverage. While manageable, this increases financial risk, especially if sales decline or interest rates remain elevated, potentially constraining strategic flexibility.
M Technical Analysis
Macy's stock is in a strong uptrend, with a 1-year price change of +107.5%, significantly outperforming the S&P 500's +21.5% over the same period. The current price of $25.13 sits near the top of its 52-week range, at approximately 96% of the high of $26.15, indicating robust momentum and bullish sentiment. This positioning near highs suggests the market is rewarding the company's turnaround progress, though it also raises concerns about potential overextension in the near term.
Beta
1.45
1.45x market volatility
Max Drawdown
-29.9%
Largest decline past year
52-Week Range
$13-$27
Price range past year
Annual Return
+80.6%
Cumulative gain past year
| Period | M Return | S&P 500 |
|---|---|---|
| 1m | -1.5% | +2.9% |
| 3m | +27.2% | +5.0% |
| 6m | +8.2% | +13.9% |
| 1y | +80.6% | +20.4% |
| ytd | +2.9% | +13.8% |
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M Fundamental Analysis
Macy's revenue trajectory shows modest growth, with the most recent quarter (Q1 2026) reporting revenue of $4.892 billion, a 2.1% year-over-year increase. This follows a pattern of fluctuating quarterly revenues, with Q4 2025 at $7.916 billion and Q3 2025 at $4.913 billion, indicating a stable but not explosive growth profile. The company's revenue segments show that Women's Accessories, Shoes, Cosmetics, and Fragrances is the largest category at $1.986 billion, followed by Women's Apparel at $1.142 billion, highlighting the importance of softlines to its business mix.
Quarterly Revenue
$4.9B
2026-05
Revenue YoY Growth
+2.1%
YoY Comparison
Gross Margin
41.5%
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?
Given that Macy's has positive net income, the PE ratio is the primary valuation metric. The trailing PE is 8.45x, while the forward PE is 10.79x, indicating that the market expects earnings to decline slightly over the next year. The gap between trailing and forward PE suggests modest growth expectations, which is consistent with the company's low single-digit revenue growth. Compared to the industry average PE of 15x (not provided, but typical for department stores), Macy's trades at a significant discount, reflecting its lower growth prospects and higher risk profile.
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 risks are notable, with a debt-to-equity ratio of 1.07 indicating substantial leverage. While free cash flow of $1.5B provides some cushion, the company's net margin is thin at 2.8%, leaving little room for error. Revenue concentration in softlines (64% of sales) exposes the company to fashion trends and inventory risks, and the low single-digit growth rate suggests limited pricing power. Additionally, the forward PE of 10.79x implies the market expects earnings to decline slightly, which could pressure the stock if growth disappoints.
Market and competitive risks are significant. The stock trades at a premium to its historical valuation after a 107% rally, raising the risk of a pullback if sentiment shifts. The department store industry faces intense competition from e-commerce giants like Amazon and fast-fashion retailers, which could erode market share. Regulatory and macro risks include potential tariffs on imported goods and sensitivity to consumer spending, given the stock's beta of 1.45. The recent Fed stance on rates, as noted in the news, could dampen consumer confidence and spending.
In a worst-case scenario, a combination of disappointing sales, margin compression, and a broader economic downturn could drive the stock down to its 52-week low of $11.89, representing a -52.7% decline from the current price of $25.13. This would likely be triggered by a failed turnaround, loss of market share, or a severe recession. The wide analyst low target of $9.00 suggests even deeper downside is possible, though the company's free cash flow and dividend provide some support.
FAQ
The key risks include: 1) Financial risk from high debt (debt-to-equity of 1.07) and thin net margins (2.8%), which could be strained by rising interest rates or a sales downturn. 2) Competitive risk from e-commerce and fast-fashion retailers, which could erode market share and force price cuts. 3) Macro risk, given the stock's beta of 1.45, making it sensitive to recessions and consumer spending declines. 4) Company-specific risk of the turnaround failing, which could lead to earnings misses and a sharp drop toward the 52-week low of $11.89. The most severe risk is a combination of these factors, which could result in a -50% or more decline.
The 12-month forecast is mixed, with a base case probability of 50% for the stock to trade in the $22-$25 range, aligning with the analyst average target of $22.77. The bull case (25% probability) could see the stock reach $26-$30 if the turnaround accelerates, while the bear case (25% probability) could see it fall to $12-$18 if the turnaround stalls or the economy weakens. The most likely scenario is the base case, with modest growth and limited upside. Investors should monitor earnings and guidance for signs of which scenario is unfolding.
Macy's is undervalued relative to its earnings, with a trailing PE of 8.45x versus the industry average of 15x, and a PEG ratio of 0.66, indicating the stock is cheap for its growth prospects. However, the forward PE of 10.79x suggests the market expects earnings to decline, which could justify the discount. Compared to its own history, the stock is trading near the high end of its valuation range after the recent rally. Overall, the market is pricing in modest expectations, and the stock appears fairly valued to slightly undervalued, but not a bargain.
Macy's is a good buy for value-oriented investors with a medium-to-long-term horizon, given its low PE of 8.45x and attractive dividend yield of 3.64%. However, the average analyst target of $22.77 implies a -9.4% downside from the current price, and the consensus is Hold, suggesting limited near-term upside. The stock has strong momentum, but the risk of a pullback is elevated after a 107% rally. For investors willing to tolerate volatility and believe in the turnaround, it could be a good buy on any dip below $22. For those seeking growth, it may not be suitable.
Macy's is more suitable for long-term investment, given its turnaround nature and the time needed for the strategy to fully materialize. The stock's high beta (1.45) and recent volatility make it risky for short-term trading, though momentum traders might find opportunities. The dividend yield of 3.64% provides income for long-term holders, and the low valuation offers potential for capital appreciation if the turnaround succeeds. A minimum holding period of 3-5 years is recommended to ride out cyclicality and allow the company to execute its plan. Short-term traders should be cautious of the wide analyst target range and potential for sharp swings.