2 page report - finance

Running Head: MACY’S INC ANALYST REPORT 1

MACY’S INC ANALYST REPORT 3

Macy’s Inc Analyst Report

Overview

Macy’s Inc. has been struggling with debt issues for a while now. The high rate of debts has remained present and made it difficult for the balance sheet to look realistic. However, the measures in place aimed at minimizing liabilities in the coming years. In this light, the company has made official announcements of the expiration and provision of final results of the exchange. This is regarding some of the outstanding debt securities of Macy’s retail holding. Decreasing amounts of sales made by the company over the last months have fueled the disadvantages associated with debts the company is having.

Overview (~100-150 words)

•State your position (Buy, Sell, or Hold), the target price, and upside/downside percent.

•Identify the key reasons for your opinion – don’t overexplain, these will be covered below.

Investment Summary

Current earnings of Macy’s Inc projects that EV/EBIT ratio will be inversed. The data depicts that the firm is expected to gain returns of up to 10%, a move that will be unique in the history of the company. The competitive advantage that the company enjoys invests a relatively more straightforward task. Although the benefits are being weakened year in year out, they are still valid, and they can support any investment. The first one is the cost advantage. The company is focused on minimizing its expenditures. For example, they are closing some of its stores which are not earning enough profit. Brand value is another advantage that investors look at. Yes, the brand is declining each day. However, it is still strong in the industry.

•Investment Summary (~300-450 words)

•For each of your key reasons identified above, explain what is driving your assumptions about the future.

Financial Analysis

Macy’s Inc. stock price performance in the last five years show fluctuations in the trend they are taking. Despite this fact, the projection for the next five years is a steady increase. Looking at the financial information provided and comparing the company with other firms engaged in stores departments, it is evident that Macy’s Inc performance of the year 2020 is the worst. A similar conclusion can be made if the company performance can be compared with the averages of entire U.s companies.

•Financial Analysis (~200-300 words)

•Explain how your key reasons are driving your financial forecasts, particularly with regards to revenue, profitability, capital spending, working capital management and leverage.

Valuation

Different valuation approaches were utilized to support P/E, P/S and EV/EBITDA positions of the company. All the locations comprise of enough data, that if well calculated gives the right estimate of what is expected out of the company. The estimates reveal a constant growth if all issues are taken into consideration. Macy’s Inc can grow and expand as it acquires more brands of the products being sold. Presence of multiple position models helps in determining the best model, which can offer the right market estimates based on the known assumptions. The company assumes that with the decreasing debts, profits will prevail in future as the earnings are expected to grow. Taking all these into consideration, it can state categorically that gains in the coming years are set to go high.

•Valuation (~200-300 words)

•Identify the methodologies used which support your position and the resulting values.

•Discuss the inputs and outputs for each method you refer to, and how they connect to your overall value hypothesis.

Investment Risks

In the past years, Macy’s Inc has been a typical company that has been hitting the headlines about the profits the company is making. Uncertainty of the US business in recent years has made it difficult for investors to trust the business. These uncertainties have mitigated different investors into channeling their investments to organizations like Macy’s Inc. The high volatility and dynamic nature of the markets have made it difficult for brand loyalty to grow. People no longer trust Macy’s Inc products as they used to do. COVID-19 challenges have also been into the market. More resources have been channeled towards addressing the issues, leaving the business world open. Besides some products have been forced to be cheaper because few people are ordering them. All these are subjecting the company to risks of investments as returns are not guaranteed.

Investment Risks (~200-300 words)

•Explain what might make the price move differently than you predict, and how you accommodated this in your analysis.