Should Value Investors Buy Macy's (M) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Macy's (M). M is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.15, which compares to its industry's average of 13.85. M's Forward P/E has been as high as 9.61 and as low as 4.69, with a median of 6.13, all within the past year.

Investors should also recognize that M has a P/B ratio of 1.06. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.22. Within the past 52 weeks, M's P/B has been as high as 1.21 and as low as 0.61, with a median of 0.86.

Finally, investors will want to recognize that M has a P/CF ratio of 3.47. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. M's current P/CF looks attractive when compared to its industry's average P/CF of 7.70. Within the past 12 months, M's P/CF has been as high as 5.04 and as low as 1.92, with a median of 2.70.

These are only a few of the key metrics included in Macy's's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, M looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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