Macy's Stock Trades at Just 10 Times Earnings. There's Only 1 Explanation for Why Macy's Is This Cheap.

Key Points Macy's shares have fallen in step with the ongoing deterioration of the entire department store business. This particular retailer owns much of the prime real estate where its stores are located. Although the industry's revenue may have finally reached bottom, investors aren't yet ready to bet on renewed growth. 10 stocks we like better than Macy's › In an environment where most stocks are uncomfortably expensive, finding a cheap one raises questions. Should you act on your luck before the rest of the crowd finds it, or is that stock cheap for good reason? Enter department store chain Macy's (NYSE: M) . Priced at less than 10 times its trailing earnings of $2.42 per share and just over 10 times next year's expected bottom line of $2.33, this retailer's stock is oddly inexpensive. What gives? Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Despite glimmers of hope, investors are pricing in expectations of continued deterioration in its business. The retail apocalypse is real The so-called "retail apocalypse" isn't complicated -- the advent of e-commerce has been steadily chipping away at brick-and-mortar retailers' revenue since the early 2000s. It's been particularly tough on department stores, and Macy's has been no exception. That's why the stock's down 66% from its 2015 peak, back to where it traded in the late 1990s. M data by YCharts But the bears have overshot their target? That's not an entirely unreasonable argument. Investors familiar with Macy's probably know it's one of the few retailers that outright owns much of the real estate where its remaining 665 stores operate. Although estimates of the value of its real estate portfolio vary widely from $5 billion to $15 billion, the low end of that range is near the company's market cap of $6 billion. In the meantime, its retail operation as it stands -- which turned $22.6 billion in sales into pretax income of $849 million last year -- is obviously worth at least a little something. Even subtracting the company's current liabilities from its current assets (about $7 billion each), Macy's market cap still doesn't reflect its presumed value. Except, maybe it shouldn't. Maybe simply being in the brick-and-mortar retail business right now is a liability in and of itself that's weighing on the company's actual value. More than a mathematical matter On paper, Macy's real estate portfolio may be worth several billion dollars. In reality, that theoretical value means nothing if selling it also means Macy's must sacrifice the revenue that particular store site generates. Besides, simply shutting down any retail store can be surprisingly expensive. Meanwhile, although not the case for all of its locations, the only prospective buyers for many of its sites would be other retailers still dealing with the aforementioned retail apocalypse. To this end, retail research outfit Coresight says store closings in the United States are on pace to reach 7,900 this year, versus only 5,500 openings. Image source: Getty Images. Connect the dots. Genuine interest in much of Macy's real estate is apt to be limited. In the meantime, the company must continue nursing its own still-lethargic retail business, which has been shrinking since 2015. Not counting on a turnaround yet Never say never. It's possible the brick-and-mortar retail business will eventually reach its absolute floor. Ditto for Macy's. We're even seeing modest evidence that it's happening right now. The market's still not quite ready to count on such recovery, though, and understandably so. Investors are still mostly pricing in the notion that the department store retail business will continue to struggle, and Macy's with it. It's probably not a bad call either. Should you buy stock in Macy's right now? Before you buy stock in Macy's, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Macy's wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $432,621 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,314 !* Now, it’s worth noting Stock Advisor’s total average return is 973 % — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 21, 2026. James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

Macy's shares have fallen in step with the ongoing deterioration of the entire department store business.

This particular retailer owns much of the prime real estate where its stores are located.

Although the industry's revenue may have finally reached bottom, investors aren't yet ready to bet on renewed growth.

In an environment where most stocks are uncomfortably expensive, finding a cheap one raises questions. Should you act on your luck before the rest of the crowd finds it, or is that stock cheap for good reason?

Enter department store chain Macy's (NYSE: M) . Priced at less than 10 times its trailing earnings of $2.42 per share and just over 10 times next year's expected bottom line of $2.33, this retailer's stock is oddly inexpensive. What gives?

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

Despite glimmers of hope, investors are pricing in expectations of continued deterioration in its business.