Shares of Macy’s Inc (NYSE: M) are up more than 10% on Thursday after reporting a strong fourth quarter and offering upbeat guidance for the future.
For the full financial year, Macy’s now expects its per-share earnings to fall between $3.67 and $4.11 on up to $24.2 billion in revenue. On CNBC’s “Squawk Box”, Cowen’s Oliver Chen said:
We like Macy’s. We like the valuation. We like what it’s doing with one, inventory management, two, strong trends in beauty, three, guidance is appropriate, and four, there’s lots of initiatives for embracing the younger customer.
Experts had forecast $3.78 a share and $24.2 billion revenue, respectively. Versus its year-to-date high, Macy’s stock is still down about 5.0%.
Markdowns and promotions resulted in a 240 basis points hit to gross margin in the recent quarter. Still, Chen added:
Overall, retailers that survived post pandemic now are in a stronger place. Macy’s well capitalised with a free cash flow yield of 11%. Also, the Macy’s stock valuation is about six times PE ratio. That’s inexpensive.
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