Is Macy's (M) Stock Undervalued Right Now?

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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Macy's (M). M is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 9.15. This compares to its industry's average Forward P/E of 13.16. 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. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. M's current P/B looks attractive when compared to its industry's average P/B of 2.08. 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, our model also underscores that M has a P/CF ratio of 3.47. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 7.06. Over the past year, 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 just a handful of the figures considered in Macy's's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that M is an impressive value stock right now.

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

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