Is Macy’s Stock Still Attractive Post Q2 Beat?
Macy’s stock (NYSE: M), a department store chain, has increased 35% in the last month (twenty-one trading days) to levels of $23 currently. In fact, the retailer’s stock has climbed around 2x from $11 levels since the beginning of 2021. But will the company’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price, returns for M stock average around 1.4% in the next one-month (twenty-one trading days) period after experiencing an increase of 3.1% during the last week. But how would these numbers change if you are interested in holding M stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis machine learning engine Macy’s stock chances of a rise. You can see the chance of recovery over different time intervals of a quarter, month, or even just one day!
Macy’s saw a stellar fiscal second-quarter after beating revenue and earnings expectations. The retailer’s sales increased 2% to $5.65 billion and adjusted earnings per share (EPS) more than quadrupled to $1.29 compared to the fiscal 2019 quarter. In fact, the company’s revenues blew past the company’s guidance of total sales of $4.9 billion to $5 billion. To add to this, the company’s comparable sales increased 5.9% relative to the second quarter of 2019. It should be noted that Macy’s expenses remained well below the 2019 levels, due to store closures, cost-cutting measures, and temporary under-staffing related to the tight labor market. Looking ahead, the company continues to expect significant earnings growth in Q3 as well, with adjusted EPS of $0.17 to $0.26, up from $0.07 in Q3 2019. However, it also estimates Q3 sales to come in between $5.04 billion and $5.19 billion, compared to $5.17 billion two years ago. This forecast implies a sequential slowdown in growth, most likely due to the recent surge in Covid-19 cases associated with the Delta variant.
MACHINE LEARNING ENGINE – try it yourself:
IF Macy’s stock moved by -5% over five trading days, THEN over the next twenty-one trading days, M stock moves an average of 1.0%, with a 55% probability of a positive return over this period.
Some Fun Scenarios, FAQs & Making Sense of M Stock Movements:
Question 1: Is the average return for M stock higher after a drop?
Answer: Consider two situations,
Case 1: M stock drops by -5% or more in a week
Case 2: M stock rises by 5% or more in a week
Is the average return for M stock higher over the subsequent month after Case 1 or Case 2?
M stock fares better after Case 1, with an average return of 1.0% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 0.8% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how M stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold Macy’s stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and the Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For M stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for M stock after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer:
The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
Macy’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Macy’s stock by changing the inputs in the charts above.
It is helpful to see how its peers stack up. M Stock Comparison With Peers to see how Macy’s compares against peers on metrics that matter.
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