Macy's stock has surged 88.5% over the past year yet still screens as undervalued based on a Discounted Cash Flow model and earnings multiples. The DCF model, using trailing free cash flow of about $966 million and moderate growth assumptions, estimates an intrinsic value of roughly $39 per share, implying the stock is about 42.2% undervalued at its recent price of $22.70. On an earnings basis, Macy's trades at a P/E of about 9.0 times, well below the Multiline Retail industry average of 18.9 times and a peer group average of 14.4 times, while a fair P/E for the company is estimated at around 12.3 times. Recent positive attention includes Morgan Stanley's new Overweight rating and a share purchase by Berkshire Hathaway CEO Greg Abel, but the market still appears to apply a cautious view to projected cash flows.
Macy’s IncArticle argues Macy's stock is undervalued based on DCF and P/E analysis, with analyst upgrade and insider buying.
Berkshire Hathaway Inc
Morgan Stanley