Is Macerich (MAC) Still Attractive After Recent Share Price Weakness And DCF Upside?

• If you are wondering whether Macerich at around US$18.66 is offering real value today, or if the easy gains are already on the table, this article will walk through what the current price actually implies.
• The stock has seen a 5.8% decline over the last 7 days and a 3.7% decline over 30 days, yet it still shows a 0.8% return year to date and an 18.6% return over 1 year, with a very large 3 year return and a 73.9% return over 5 years.
• Recent moves in Macerich's share price come against a backdrop of ongoing interest in listed real estate and how retail focused property owners are positioned within that space. For investors watching the stock, that context makes it especially important to separate sentiment from what the underlying valuation methods are actually saying.
• On our checks, Macerich has a valuation score of 4 out of 6. This suggests there are several areas where the stock screens as potentially undervalued. Next we will look at how different valuation approaches line up on that point before closing with an even more useful way to think about value.

Macerich delivered 18.6% returns over the last year. See how this stacks up to the rest of the Retail REITs industry.

Approach 1: Macerich Discounted Cash Flow (DCF) Analysis

A DCF model estimates what a business could be worth by projecting its future adjusted funds from operations, then discounting those cash flows back to today to reflect risk and the time value of money.

For Macerich, the model uses a 2 stage Free Cash Flow to Equity approach based on adjusted funds from operations. The latest twelve month free cash flow is about $397 million. Analyst inputs and extrapolated estimates put projected free cash flow at $478 million in 2030, with a series of yearly forecasts between 2026 and 2035 that are discounted back to today.

Adding these discounted projections together gives an estimated intrinsic value of about $31.27 per share. Compared with the current share price of around $18.66, the model implies the stock trades at a 40.3% discount to this DCF estimate. This suggests that, on this measure alone, Macerich appears undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Macerich is undervalued by 40.3%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Macerich.

Approach 2: Macerich Price vs Sales

For profitable companies that already generate meaningful revenue, the P/S ratio is a straightforward way to see how much investors are paying for each dollar of sales. It is especially useful when earnings are volatile or not the main focus, which can be the case for real estate businesses.

In general, higher growth expectations and lower perceived risk can justify a higher P/S multiple, while slower growth and higher risk usually point to a lower, more conservative range. So, what matters is not the absolute number, but whether it is reasonable for the company’s profile.

Macerich is currently trading at a P/S of 4.60x. That sits below both the Retail REITs industry average of 6.63x and the peer average of 7.22x. Simply Wall St’s Fair Ratio for Macerich is 3.28x. This Fair Ratio is a proprietary estimate of what a suitable P/S could be, given factors such as earnings growth, profit margins, industry, market cap and specific risks.

Because the Fair Ratio builds in these company specific drivers, it can be more informative than a simple comparison with peers or the industry. With Macerich at 4.60x versus a Fair Ratio of 3.28x, the shares screen as priced above that tailored range on this metric.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Macerich Narrative

Earlier we mentioned that there is an even better way to understand valuation. Narratives let you attach a clear story about Macerich to the numbers you care about, linking your view of its future revenue, earnings and margins to a forecast and then to a Fair Value that you can compare with today’s price to help decide whether to buy, hold or sell. All of this is available inside Simply Wall St’s Community page, where Narratives are updated as new news or earnings arrive. You might, for example, align with a more optimistic view closer to a Fair Value around US$23.89, or a more cautious stance nearer US$15.00, depending on which story you find more convincing.

For Macerich however we will make it really easy for you with previews of two leading Macerich Narratives:

🐂 Macerich Bull Case

Fair value: US$21.13 per share

Gap to fair value: around 12% below this narrative fair value based on the last close of US$18.66

Revenue outlook used in this narrative: 1.81% annual decline

• Focuses on the Path Forward Plan, with execution, deleveraging and portfolio refinement around high quality urban and coastal malls at the center of the thesis.
• Builds in expectations for improving profit margins, a smaller revenue decline and a lower discount rate to arrive at a fair value above the current share price.
• Anchors off an updated analyst consensus target, but highlights that views differ across the Street and encourages you to test the assumptions against your own expectations.

🐻 Macerich Bear Case

Fair value: US$15.58 per share

Gap to fair value: around 20% above this narrative fair value based on the last close of US$18.66

Revenue outlook used in this narrative: 4.88% annual decline

• Frames Macerich as operating close to peak fundamentals and occupancy, with less room for easy improvement in rents, revenues and funds from operations.
• Emphasizes high leverage, refinancing risk and ongoing exposure to weaker malls and challenged retail markets as key constraints on future earnings and cash flow.
• Assumes a lower fair value than today’s price, even after factoring in some improvement in margins and revenue trends, and points to sector level caution among analysts.

If you want to see how these stories are built in full, including the detailed earnings paths, risk checklists and valuation assumptions behind each one, Curious how numbers become stories that shape markets? Explore Community Narratives and compare which version of Macerich’s future feels closer to your own view before you act.

Do you think there's more to the story for Macerich? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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