Macy’s Stock Chart Improves: Expect Near-Term Gains

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Macy’s Stock Chart Improves: Expect Near-Term Gains

(M., $59.56, down $0.26 midday)

The stock chart on department store giant Macy’s, Inc. has turned bullish.  Here’s what to expect in sales, earnings, and the stock price:

Morgan Stanley foresees continued market share gains at Macy’s.

Wall Street expects Macy’s earnings per share (EPS) to grow moderately at 10.5%, 13.3%, and 10.8% in 2015 through 2017 (January year-end).  EPS growth has been significantly propped up by share repurchases, to the tune of approximately $1.6 billion each in 2013, and projected in 2014.  The company has another $1.5 billion cash on its balance sheet.

The price-earnings ratio (PE) is fair at 13.5, at the high end of its normal four-year range of 7-14.

The dividend yield is attractive at 2.1%, and the long-term debt-to-capitalization ratio is higher than I prefer, at 50%.

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All eight 2013 & 2012 Goodfellow LLC stock portfolios

dramatically outperformed both the S&P 500 and the Dow!

View our outstanding 2013 and 2012 stock portfolio results.  

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I last discussed Macy’s stock on May 12th when I said, “I would hold off on additional purchases until the chart turns bullish.”   After six-months of trading sideways,  mostly between $56-$61, the stock broke past upside resistance on August 22.

The stock is currently experiencing an orderly pullback, in a new trading range of $59-$63.  It appears to be trading at the lowest price that we’ll see in the near-term, barring any negative news or market correction.

Macy’s shares do not meet Goodfellow LLC investment criteria, because the projected earnings growth is too slow, the shares are fully valued, and the long-term debt-to-capitalization ratio is a little high, at 50%.  However, none of these numbers are alarming.

Current shareholders should hold their shares and expect additional near-term upside.

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Both 2014 Goodfellow LLC sample stock portfolios are beating the S&P 500 and the DJIA year-to-date!

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New investors should be able to achieve better capital gains with lower risk by investing in companies with stronger earnings growth.  Please subscribe now to Goodfellow LLC, then look to the home page for current ideas on growth stock opportunities.  Start with our weekly feature, “Monday’s Buy List.”

Goodfellow LLC Rating:  Hold, Public. (09-12-14)

 

Chart courtesy of StockCharts.com.

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Send questions and comments to research@GoodfellowLLC.com.

Happy investing!

 

Crista Huff

President

Goodfellow LLC

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