NEW YORK (TheStreet) -- Shares of Macy's (M) were sliding, down 2.19% to $68.32 in early market trading Monday, after analysts at Deutsche Bank downgraded the department store chain by two notches this morning.
Analysts cut their rating on Macy's to "sell" from "buy" with a lower price target of $63 from $71.
The firm based its downgrade on the retailer's soft earnings and limited buybacks.
Deutsche analysts added that they have little confidence that Macy's can get out of its same-store sales rut.
Cincinnati, Ohio-based Macy's is an omni-channel retail company operating stores and Internet websites under the brands Macy's and Bloomingdale's.
Separately, 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 notable return on equity, expanding profit margins, solid stock price performance and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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.
- 39.02% 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. Regardless of the strong results of the gross profit margin, the net profit margin of 3.09% trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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's earnings per share declined by 6.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MACY'S INC increased its bottom line by earning $4.27 versus $3.90 in the prior year. This year, the market expects an improvement in earnings ($4.70 versus $4.27).
- M, with its decline in revenue, slightly underperformed the industry average of 2.1%. Since the same quarter one year prior, revenues slightly dropped by 0.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: M Ratings Report