Macy's Inc Stock Buy Recommendation Reiterated (M)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Macy's (NYSE: M) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, reasonable valuation levels, growth in earnings per share and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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Highlights from the ratings report include:
  • MACY'S INC has improved earnings per share by 12.5% 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 $2.91 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($3.37 versus $2.91).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.1%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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.
  • Net operating cash flow has significantly increased by 527.50% to $251.00 million when compared to the same quarter last year. In addition, MACY'S INC has also vastly surpassed the industry average cash flow growth rate of 55.28%.

Macy's, Inc., together with its subsidiaries, operates stores and Internet Websites in the United States. Its retail stores and Internet Web sites sell a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. Macy's has a market cap of $14.98 billion and is part of the services sector and retail industry. The company has a P/E ratio of 11.9, below the S&P 500 P/E ratio of 17.7. Shares are down 1.5% year to date as of the close of trading on Wednesday.

You can view the full Macy's Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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