Macy’s Stock Surges 30% in 2024—But Why Is It Still Undervalued?
Macy’s stock has climbed by nearly a third this year, far outpacing the S&P 500’s 15% rise. Despite this strong performance, its shares still trade at a discount compared to rivals like Kohl’s and Dillard’s. Analysts point to weaker guidance, slower revenue growth, and broader challenges in the department store sector as key reasons for the lower valuation.
Sell-side analysts project Macy’s 2027 earnings per share (EPS) at $2.21, well below Dillard’s forecast of $27.92 and slightly ahead of Kohl’s at $1.23. Currently, Macy’s trades at around 12.5 times forward earnings, while Kohl’s sits at over 20 times and Dillard’s at nearly 34 times. The gap reflects investor concerns over Macy’s weaker full-year guidance and sluggish revenue trends.
Macy’s has faced structural pressures, including competition from discount retailers and shifting consumer habits. Its 'Bold New Chapter' turnaround plan aims to address these issues by closing underperforming stores and refining its merchandise mix. Meanwhile, Dillard’s has stood out with a 2.7% revenue increase in Q3 and strong profitability driven by share buybacks, pushing its stock to $625.05. Kohl’s, though struggling with revenue declines, has seen its share price rise to $21.34 on positive momentum.
Macy’s middle-to-upper income shoppers have held up better than middle-class consumers amid economic uncertainty. However, its Q4 FY2026 EPS guidance fell short of expectations, leaving room for potential upside if holiday sales exceed forecasts. With its stock previously trading above $30, some analysts believe current trends could push it back to that level.
Macy’s valuation remains lower than its peers, creating potential for expansion if its turnaround gains traction. The company’s focus on store optimisation and customer experience could help narrow the gap. For now, its discount reflects both market scepticism and the broader struggles of traditional department stores.
