Don't Be Tempted by Macy's Big Dividend Yield
Macy's (NYSE: M) stock recently tumbled to a 10-year low after the retailer posted second-quarter earnings. Its revenue fell 0.5% annually to $5.55 billion, meeting expectations, but its adjusted EPS plummeted 60% to $0.28 and missed expectations by $0.17.
Macy's reaffirmed its guidance for roughly flat sales growth for the full year but slashed its EPS guidance from $3.05-$3.25 to $2.85-$3.05 -- which would equal a 27% to 32% drop from 2018. Wall Street had expected a 27% decline.
Macy's big post-earnings drop reduced its forward P/E to 6 and boosted its dividend yield to 8%. That low valuation and high yield might look tempting to value-seeking investors, but I think it's still a falling knife.
Source Fool.com
