By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
Panelists are generally skeptical about Macy's long-term prospects, with most citing structural headwinds and a lack of proven turnaround. They agree that Berkshire's stake is not a significant catalyst, and the valuation appears cheap only if earnings visibility improves. The real estate arbitrage opportunity is underexplored but also speculative, as detailed plans and balance sheet information are lacking.
Risk: Failing to translate a stabilized top line into durable free cash flow and elevated promotions leading to earnings visibility fade.
Opportunity: Potential real estate arbitrage if Macy's successfully monetizes prime urban locations.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Macy's reported a 3% comps increase in the first quarter and beat expectations for EPS.
Berkshire Hathaway opened a new stake in the company.
Macy's stock is trading at a cheap valuation.
Shares of Macy's (NYSE: M) stock rose 11% in May, according to data provided by S&P Global Market Intelligence. It got a boost from Berkshire Hathaway's new stake, and it reported a solid earnings beat.
Macy's owns the largest department store in the world in Herald Square in New York City, but while massive stores used to generate massive sales, the retail climate has drastically changed in recent years. The advent of e-commerce and the shift to smaller, more agile shopping venues have been a major drag on Macy's sales, and it has struggled to stay relevant.
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It has been trying to pump oxygen into the business for years, with muted success. It has closed a significant percentage of stores to allocate resources to the better-performing ones, it has renovated stores that remain open, and it has shifted focus to e-commerce and omnichannel shopping. Management calls its strategy the "Bold new chapter," and it also involves becoming more efficient through technology.
There's been progress, and adjusted earnings per share (EPS) came in at $0.13 in the 2026 fiscal first quarter (ended May 3), a full dime higher than the $0.03 expected by Wall Street analysts. Comparable sales (comps) were up 3% year over year, the best result in four years, driven by an oustanding 10.2% increase at Bloomingdale's; Macy's also owns cosmetics retailer Bluemercury, which was also strong with a 6.4% comps increase.
The company reported a comps increase for the full 2025 after several years of declines, and it's expecting positive comps in 2026 as well.
Macy's stock has been slammed over the past few years as sales declined and it seemed to be on the way to irrelevance. But Greg Abel is Warren Buffett's disciple, and part of the Buffett way is to find undervalued stocks. Macy's still has plenty of assets, and its new strategy is breathing life into the business, which means it could be primed for a comeback.
The stock is 70% off its high from a decade ago, and it's trading at less than nine times trailing 12-month earnings. It's easy to see why this combination could look compelling if you believe Macy's has a way forward.
Berkshire Hathaway's stake is only a tiny fraction of its portfolio, and it accounts for 1.2% of Macy's stock, so investors should take this with a grain of salt. Macy's does pay an attractive dividend, though, that yields 3.4% at the current price.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"Macy's looks cheap on earnings, but the upside requires a durable turnaround that the current evidence has not yet proven."
May's 11% jump appears driven by Berkshire Hathaway's new stake and a Q1 beat, but the sustained upside hinges on a durable turnaround that isn't yet proven. Macy's comp trend (+3% with Bloomingdale's +10.2%) looks promising but remains fragile in a challenging retail environment with ongoing store rationalization and heavy promotional cycles. The valuation (sub-9x trailing earnings) is attractive only if earnings visibility improves; otherwise the multiple could compress back as macro and consumer headwinds persist. Berkshire's 1.2% stake is non-dominant and unlikely to sustain a long-term re-rating if operating momentum fades. The article glosses over sustainability risk.
The rally could be a temporary multiple-expansion from a small, non-core stake; if comps stall or promotions end, the stock could revert to a much lower level.
"The recent stock performance is driven by superficial sentiment and a minor institutional position rather than a fundamental turnaround in the core department store business."
Macy's (M) 11% pop is a classic 'value trap' rally. While the 3% comps growth and EPS beat are positive, they mask the structural decay of the core Macy’s brand, which continues to lose share to off-price retailers and digital-native competitors. The Berkshire Hathaway stake is a red herring; at 1.2% ownership, this is likely a small, opportunistic position rather than a long-term conviction play. Trading at 9x trailing earnings is cheap, but only if you assume the business has reached a terminal state of stability. I suspect the 'Bold New Chapter' is just a rebranding of managed decline, and the dividend yield is a poor consolation for a shrinking top line.
If the 'Bold New Chapter' strategy successfully pivots to smaller-format stores and high-margin omnichannel efficiency, the current 9x P/E multiple represents a significant mispricing that could lead to a massive re-rating as margins expand.
"A single quarter of positive comps and a 1.2% Berkshire stake do not constitute evidence of a sustainable turnaround in a structurally declining department store model."
The article conflates three separate catalysts—a Berkshire stake, a beat, and cheap valuation—without interrogating whether any justify the 11% move. Berkshire's 1.2% stake is explicitly called 'tiny' by the article itself; that's not a thesis, it's portfolio noise. The real question: is Q1's 3% comp growth sustainable or a seasonal bounce? Bloomingdale's 10.2% comp is impressive, but Macy's nameplate comps aren't disclosed separately—we only know the blended result. At 9x trailing earnings on a turnaround story with structural headwinds (e-commerce, mall traffic), the valuation looks cheap for a reason. The 3.4% dividend is attractive only if earnings don't compress further.
If Macy's has genuinely inflected—three consecutive quarters of positive comps, margin expansion from 'Bold New Chapter' efficiency gains, and Berkshire's validation of asset value—then 9x on normalized earnings (not trough earnings) could be undervalued. The real risk isn't the thesis; it's that one strong quarter doesn't prove the turnaround is durable.
"Macy's remains a value trap because structural retail decline outweighs the temporary Q1 momentum and symbolic Berkshire purchase."
Macy's 3% comps beat and $0.13 EPS print look encouraging after years of declines, yet the article underplays how department stores face permanent share loss to e-commerce and off-price rivals. Berkshire's 1.2% stake is tiny and does not imply deep conviction from Greg Abel. The stock's sub-9x multiple reflects chronic margin pressure and store closures that have not reversed the top-line erosion. Positive 2026 guidance is welcome but follows multiple prior failed turnarounds under the same 'Bold new chapter' framing.
Bloomingdale's 10.2% comp surge could prove the omnichannel investments are finally scaling, and any sustained positive comp streak would force a re-rating well above current levels.
"The real risk is that stabilized topline does not translate into durable cash flow, meaning the 9x P/E multiple could re-rate lower if promotions stay elevated."
Gemini risks over-reading a single quarter as proof of structural decay. Omnichannel investments and store rationalization could generate margin expansion even with ongoing share loss to off-price. The Bloomingdale's upside hints at mix benefits, not just a bounce. The bigger risk is failing to translate a stabilized top line into durable free cash flow—if promotions stay elevated, the 9x P/E could compress when earnings visibility fades.
"Macy's valuation is driven by potential real estate monetization rather than core retail operational performance."
Gemini and Grok are ignoring the real estate arbitrage embedded in Macy's. The 'Bold New Chapter' isn't just retail strategy; it is a liquidation of underperforming mall assets to unlock NAV (Net Asset Value). If they monetize prime urban locations, the P/E multiple becomes irrelevant because the stock trades on a sum-of-the-parts basis. The risk isn't just retail decay; it is management failing to execute asset sales before the commercial real estate market further deteriorates. Stop focusing on comps and look at the balance sheet.
"Real estate value is real but unquantified; without disclosure of owned properties and sale timelines, it's a hidden lever that could justify 9x P/E or prove illusory."
Gemini's real estate arbitrage angle is underexplored, but it's also speculative. The article doesn't disclose Macy's owned vs. leased footprint or any active monetization plan. If 'Bold New Chapter' is genuinely a REIT-lite strategy, that changes the valuation frame entirely—but we need balance sheet detail, not inference. The risk: management talks omnichannel efficiency while quietly sitting on appreciated real estate, leaving value on the table as CRE deteriorates. That's execution risk, not thesis risk.
"Real estate monetization is speculative and won't reverse Macy's structural retail decay."
Gemini's real estate arbitrage claim hinges on unproven asset sales that the article never quantifies or even flags as active strategy. Macy's mall-heavy footprint faces the same CRE headwinds that have crushed other retailers' NAV realizations, and any proceeds would likely fund buybacks or dividends rather than fix core share loss to off-price rivals. Without balance sheet details, this is narrative, not catalyst.
Panelists are generally skeptical about Macy's long-term prospects, with most citing structural headwinds and a lack of proven turnaround. They agree that Berkshire's stake is not a significant catalyst, and the valuation appears cheap only if earnings visibility improves. The real estate arbitrage opportunity is underexplored but also speculative, as detailed plans and balance sheet information are lacking.
Potential real estate arbitrage if Macy's successfully monetizes prime urban locations.
Failing to translate a stabilized top line into durable free cash flow and elevated promotions leading to earnings visibility fade.