Is Macy’s Stock a Buy-Low Opportunity?

Macy’s (NYSE:M) is one of the largest department store retailers in the United States. It has survived as a business for over 150 years.

However, like many of the old guard in the retail sector, it is facing serious challenges going forward.

The company released its third-quarter 2019 results in November. Macy’s was forced to issue a profit warning for the third time this year. It now expects annual earnings to drop by more than a third in this fiscal year compared to 2018. Unsurprisingly, the stock has suffered in the wake of these reports.

Shares have dropped 42% in 2019 as of close on December 12. The stock has averaged an 18% drop over the past five years, which illustrates just how damaging the retail apocalypse has been for Macy’s.

Its stock now possesses a forward price-to-earnings ratio of 6.4 according to Morningstar analysis, and a price-to-book value of 0.8.

Other retailers like Walmart and Target have thrived in this environment.

In the case of companies like Walmart, management has managed to move aggressively into e-commerce while leveraging its brick-and-mortar presence by moving into other sectors like grocery. Macy’s has adopted a similar strategy in pursuing a greater online presence, but its fortunes have continued to dim into late 2019.

There are opportunities in the retail sector, but Macy’s is not a stock I’m betting on ahead of the New Year.