Yahoo Finance Macy's, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
Macy's, Inc. (NYSE:M) shares fell 8.6% to US$15.43 in the week since its latest quarterly results. Revenues of US$5.2b fell slightly short of expectations, but earnings were a definite bright spot, with per-share profits of US$0.01 an impressive 200% ahead of estimates. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Check out our latest analysis for Macy's
Taking into account the latest results, the twelve analysts covering Macy's provided consensus estimates of US$24.4b revenue in 2021, which would reflect a discernible 4.0% decline on its sales over the past 12 months. Earnings per share are expected to fall 17% to US$2.59 in the same period. Before this earnings report, analysts had been forecasting revenues of US$24.8b and earnings per share (EPS) of US$2.65 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
The average analyst price target fell 11% to US$16.25, with reduced earnings forecasts clearly tied to a lower valuation estimate. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Macy's analyst has a price target of US$27.00 per share, while the most pessimistic values it at US$12.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One obvious concern is that although revenues are forecast to continue shrinking, the expected 4.0% decline next year is substantially more severe than the 2.2% annual decline over the past five years. Compare this with our data on other companies (with analyst coverage) in a similar industry, which in aggregate are forecast to see their revenue decline 4.2% per year. So it looks like Macy's is also expected to see its revenues decline at a faster rate than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Macy's's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Macy's going out to 2022, and you can see them free on our platform here..
You can also view our analysis of Macy's's balance sheet, and whether we think Macy's is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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