NEW YORK (TheStreet) -- Shares of Macy's Inc. (M - Get Report) are down -5.62% to $56.40 on very heavy trading volume after the company earlier today lowered its full year same-store sales forecast, saying a 3.3% increase in second quarter sales would not compensate for first quarter weakness.
The retailer missed second quarter earnings estimates as net income was up 3.9% to $292 million, or 80 cents per share, from $281 million, or 72 cents, a year ago. However, analysts had estimated 86 cents on average, according to Bloomberg data
Second quarter sales at stores open at least a year climbed 3.4%, missing the 3.9% analysts had projected. The retail chain has had to rely on discounts and promotional events, such as its Friends and Family sale, to get customers in the door, eroding margins, Bloomberg said.
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WATCH: More market update videos on TheStreet TV TheStreet Ratings team rates MACY'S INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation: "We rate MACY'S INC (M) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- MACY'S INC has improved earnings per share by 9.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MACY'S INC increased its bottom line by earning $3.90 versus $3.29 in the prior year. This year, the market expects an improvement in earnings ($4.49 versus $3.90).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Multiline Retail industry average. The net income increased by 3.2% when compared to the same quarter one year prior, going from $217.00 million to $224.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Multiline Retail industry and the overall market, MACY'S INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- 38.91% is the gross profit margin for MACY'S INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 3.56% is above that of the industry average.
- You can view the full analysis from the report here: M Ratings Report