What Macy's Holders Bought Into

If you had decided to buy Macy's on 9 October 2025, the past year did not punish that call. For Macy's shareholders, the return over the past year was 34.5%, including dividends. That gain now sits next to a very different data set from the starting line, when analysts were split on whether shrinking store traffic, heavy discounting, and omni channel upgrades could really pay off. Were early buyers correctly prioritizing real estate, private labels, and digital execution over those structural worries?

The useful thing about a Narrative is that the reasoning is checkable: the assumptions sit beside the argument, and together they imply an estimated Fair Value you can disagree with.

If the move has made Macy's harder to judge, start where the gap is still open and scan 29 high quality undervalued stocks.

The Two Macy's Narratives Investors Had To Weigh

The shares cost US$17.28 at the start, and anyone looking at Macy's had to decide which story felt more plausible.

The bullish narrative put Fair Value at US$23, or 33% above the start price. It leaned on omni channel investments, private label expansion, and urban real estate helping revenue and earnings as high income city shoppers spent more in hybrid online and store formats.

The more cautious view set Fair Value at US$15.79, or 9% below the start level. That case accepted omni channel and store upgrades as helpful but focused on revenue falling 6.1% a year and a future P/E of 8.4x as key risks.

What The Macy's Evidence Did To The Two Stories

Macy's Q2 2027 update gave the bullish story fresh support. Total revenue was US$5,059m and net income reached US$169m, with net margin rising from 1.7% to 3.3%. Berkshire Hathaway building roughly a 1% stake and the firm pushing its Bold New Chapter store closures and remodels also leaned toward the optimistic case. UBS warning on market share and insider selling pushed back, so the evidence cut both ways.

The live question for any future Macy's style call is clear. When a thesis hangs on better profitability from store rationalisation and omni channel upgrades, you track net margin and absolute earnings in each set of reported numbers to see if that story is actually showing up in the accounts.

What Macy's Price Now Asks You To Believe

Macy's shares trade at US$22.67 today, and the selected Narrative’s Fair Value line sits below that quote. The current stance reads as cautious rather than outright dismissive of what the retailer has achieved so far.

This Narrative argues that today’s valuation leans on Macy’s transformation, cost savings and luxury banners holding up. A buyer at this level effectively assumes those supports stay intact, so how does the risk of ongoing market share pressure and uneven store performance weigh on that belief?

"The main thing that has to go right is that Macy's store reimagination, assortment elevation, and AI driven efficiency efforts together sustain comp growth and margin resilience across the core banner and luxury formats. The current numbers imply a share price that assumes Macy's multi banner transformation and cost savings targets are largely delivered and that present earnings power is durable rather than fragile."

Not everyone reads the same price the same way. → See the lower figure this Narrative lands on, and how it gets there

Find Your Own Contrarian Opportunity

You may be late to this rally, but that does not have to mean arriving late to every opportunity. Start with companies whose prices leave room for a different view of their future. Here are three trading below our estimates.

• Company 1 - 43% below our estimate - converts technical expertise into consulting on complex engineering and scientific disputes.
• Company 2 - 34% below our estimate - turns a large pipeline of modular industrial projects into recurring service work.
• Company 3 - 46% below our estimate - expands a digital betting platform as users adopt online payment-focused gambling solutions.

That is three of the list. See the full list of 25 financially solid companies →

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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