Buy Or Fear Macy’s Stock?
Macy’s stock (NYSE: M) has risen 37% in the last month, but the stock increasingly looks very unattractive given its weak operating performance and financial condition. Despite strength in consumer spending pockets and improving demand trends in beauty and off-price categories, the company’s high fixed costs and exposure to discretionary spending make it highly vulnerable to economic slowdowns, and even modest pullbacks in consumer sentiment could weigh heavily on earnings.
In Q2 2025, Macy’s reported revenue of $5.6 billion, down 4% year-over-year as comparable store sales softened amid a more cautious consumer backdrop. Net income came in at $210 million, a 22% decline, while adjusted EBITDA of $480 million also lagged prior-year results. Free cash flow narrowed to $120 million, pressured by weaker sales trends and elevated promotional activity. The balance sheet carries $3.9 billion in debt against $800 million in cash, offering limited flexibility in the event of a downturn. Digital sales and luxury banners provided some resilience, but continued weakness in core apparel and home categories underscored the company’s cyclical and discretionary-driven profile. Separately, see –ServiceNow Stock To Less Than $450? But no matter how seemingly attractive, investing in a single stock carries high risk. The Trefis High Quality Portfolio is designed to reduce stock-specific risk while giving upside exposure.
[1] Valuation Looks Low
Macy’s trades at a steep discount to the market. Its price-to-earnings ratio is 8.1, substantially lower than the S&P 500’s 23.9. On free cash flows as well, the company is trading at 17.8 compared to the S&P500’s 21.
[2] Growth Is Very Weak
Macy’s growth has been very weak. Over the past three years, revenues have dropped at an average annual rate of -4.4% versus 5.3% for the S&P 500. In the last twelve months, sales dropped -3.8% from $24 billion to $23 billion, and most recently, quarterly revenue decreased -4.1% year-over-year to 4.8 billion. By comparison, the index grew over 6.1%.
[3] Profitability Appears Very Weak
Over the past year, Macy’s generated $879 million in operating income, a 3.9% margin, alongside $1.1 billion in operating cash flow (4.8% margin), and $558 million in net income (2.4% margin). Macy’s operating and cash flow and net margins are lower than the S&P500, which stands at 18.86%, 20.2%, and 12.7% respectively for the index.
[4] Financial Stability Looks Weak
Macy’s carries relatively high debt with a low cash balance. Its debt-to-equity ratio is 124.9%, below the S&P 500 average of 20.5%. Meanwhile, cash makes up 5.8% of total assets, compared with 7.2% for the index.
[5] Downturn Resilience Looks Very Weak
M stock has fared worse than the S&P 500 index during various economic downturns. In the 2022 inflation shock, M stock fell 71.7% vs. a peak-to-trough decline of 25.4% for the S&P 500. Additionally, in the 2020 Covid pandemic crisis, M stock fell 75.5% vs. a peak-to-trough decline of 33.9% for the S&P 500.
Looking for Smarter Alternatives?
Macy’s combines low valuation with weak growth along with very weak profitability. Even at its low valuation, it makes the stock volatile, and unattractive for investors.
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