Why Macy's (M) Is Rising After Hours

NEW YORK (TheStreet) -- Macy's (M) rose 5.2% to $54.52 in after hours trading Wednesday following an announcement that it will cut 2,500 jobs and shut down five underperforming stores, while opening eight others.

The retailer said it will reassign or transfer some employees as it reorganizes to maintain profitability. It will keep its workforce level at about 175,000 workers.

In a separate announcement Macy's said same-store sales in November and December rose 3.6% from the year-ago period. Same-store sales were up 4.6% when including third parties.

Macy's also narrowed its guidance for second-half sales growth to a range of 2.8% to 2.9%, compared to its prior guidance of 2.5% to 4%. The retailer reaffirmed its full-year profit estimates of $3.80 to $3.90 a share. The guidance calls for same-store sales to rise 2.5% to 3% for the year with profit of $4.40 to $4.50 a share.

TheStreet Ratings team rates MACY'S INC as a Buy with a ratings score of A. The team has this to say about its 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 revenue growth, notable return on equity, solid stock price performance, growth in earnings per share and increase in net income. 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:

  • M's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 3.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 30.55% and other important driving factors, this stock has surged by 39.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, M should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • MACY'S INC has improved earnings per share by 30.6% 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 $3.29 versus $2.91 in the prior year. This year, the market expects an improvement in earnings ($3.88 versus $3.29).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Multiline Retail industry average. The net income increased by 22.1% when compared to the same quarter one year prior, going from $145.00 million to $177.00 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.

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