Macy's (M) Stock May Be 28% Undervalued On Cash Flow

Macy's has logged a strong share price run in recent years, which naturally raises a question for anyone looking at the stock today. Are the cash flows from this retail business enough to justify where the market now values it?

• The share price is up 93.5% over the past 3 years, which puts real weight on whether the underlying cash generation can keep backing that move.
• The business model relies heavily on converting store and digital sales into steady free cash flow, which can shape how resilient its valuation is through retail cycles.
• If you'd rather focus on earnings, this one's for you. See what Macy's's 8.6x P/E says about the price.

For investors, the debate is whether Macy's current share price around US$24.70 is well supported by the cash flows that its operations are expected to produce.

If you want to stress test whether Macy's valuation question also shows up elsewhere, compare it with companies in the 32 high quality undervalued stocks.

Is Macy's Still Cheap on Cash Flow?

The Discounted Cash Flow (DCF) approach here focuses on the cash Macy's can return to shareholders over time. Latest twelve month free cash flow sits around $976.2 million, so the model starts from a business already throwing off a material amount of cash rather than one that still needs to prove its economics.

Analysts then project Macy's free cash flow to stay in the hundreds of millions of dollars, with estimates extending out over the next decade that point to a gradually growing stream rather than a sharp ramp up or steep drop. When those future cash flows are discounted back and compared with the current share price of $24.70, the DCF output suggests Macy's estimated intrinsic value is meaningfully above where the stock trades today. Find out what Macy's could be worth using our Discounted Cash Flow (DCF) estimate.

The Macy's Narrative: What Would Justify Today's Price?

Narratives for Macy's pick up where the valuation puzzle leaves off and spell out which paths for future growth, profitability and earnings would need to play out for the stock to look materially higher or lower than it does today. Each one ties its figure to a clear view on where revenue expansion, margin shape and key risks might head, giving you a structured storyline you can revisit as fresh information comes through.

One of the top narratives on Macy's: 6% overvalued

This Narrative is the analyst consensus Narrative on Simply Wall St, which compiles analysts' consensus price target and revenue and earnings forecasts, not one person's view.

"The main thing that has to go right is that higher AUR, luxury growth at Bloomingdale's and Bluemercury, and AI enabled supply chain and digital tools continue to offset competitive pressures and any softness in demand…"

Discover why this Narrative puts Macy's at 6% overvalued.

One more check for Macy's before you stop at the share price

Before you close the file on Macy's, it is worth asking who is steering the business and how their pay packets line up with the outcomes you care about. See who runs Macy's and how they are paid.

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