Shares of retailer Macy’s (M) fell in today’s trading as investors await its Q2 earnings results on August 21 before the market opens. Analysts are expecting earnings per share to come in at $0.30 on revenue of $5.052 billion. This equates to 15.4% EPS increase and a -4.5% revenue decrease on a year-over-year basis.
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Interestingly, it’s worth noting that Macy’s has beaten earnings estimates every quarter since its 2020 Q3. Therefore, it is likely that investors are expecting the same thing to happen again this quarter, which could make the stock more vulnerable to an earnings miss.
And there are reasons for investors to be cautious about a potential end to its EPS win streak. According to TipRanks’ Bulls Say, Bears Say tool, Macy’s has been losing market share since 2019. In addition, the firm’s turnaround plan faces execution risk and an uncertain timeline. Nevertheless, Macy’s is seeing greater conversion, traffic, and customer satisfaction at First 50 stores, which suggests that its turnaround plan is indeed working.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a large 10.03% move in either direction.
Is Macy’s a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Hold consensus rating on Macy’s stock based on three Buys, seven Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 25% rally in its share price over the past year, the average Macy’s price target of $18.50 per share implies 4.28% upside potential.
