Macy’s, Inc. (M) boosted its full year earnings guidance on Apr 27 as same-store sales are expected to be stronger than previously forecast. The company has attractive valuations, with a forward P/E of 14.1.
Macy’s is a retailer which operates 850 department stores under the brands Macy’s and Bloomingdale’s in 45 states, the District of Columbia, Guam and Puerto Rico.
Fiscal 2010 Outlook Raised
Like many of the retailers, Macy’s saw a much better first quarter than anticipated as the consumer returned to the shopping mall. For the first quarter, which ends May 1, same store sales were expected to jump by 5% which is what the company also expected when it released March sales results in early April.
Given this great first quarter, it hiked its full year sales forecast to the range of 3% to 3.5% growth. Previously, Macy’s had guided full year 2010 sales up just 1% to 2%.
Earnings per share are expected to be break-even for the quarter. The Zacks Consensus Estimate was also calling for break-even. The company lost 16 cents in the year ago period.
However, given the improvement seen in the first quarter, Macy’s also raised its full year guidance to the range of $1.75 to $1.80, up from the prior guidance of $1.55 to $1.60.
Zacks Consensus Estimates Already Rising
The analysts were already well ahead of the company. 10 estimates had moved higher for the full year in the last 30 days as March same-store sales, which were reported on Apr 8, soared by 10.8%.
The fiscal 2010 Zacks Consensus Estimate jumped to $1.76 from $1.64 in the last month. Let’s see if analysts revise further now that the company has revised its earnings range higher.
March benefited from an earlier Easter and warmer weather across a wide swath of the country, and the company said it will likely steal some sales from April, but it was still an impressive rebound from the year ago period.
Online sales especially soared, growing 40.4% in March and up 39.3% year to date.
Fundamentals
Macy’s is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 2.2 which is in the value range of under 3.0.
The company also has a trailing return on equity (ROE) of 13% which is well above the industry average of 2.3%.
Shareholders get a boost from a dividend that is yielding 0.8%. Dividends are rare in the retail sector. The industry average is zero.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
