Will Macy’s Outperform in the New Year?

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With shares trading around $37.36, is Macy’s, Inc. (NYSE:M) an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s MovementMacy's

Macy’s reported that same-store sales declined about 0.7 percent in November, kicking off a generally underwhelming holiday shopping season.

CEO Terry Lundgren commented, “Despite the largest-volume Thanksgiving weekend in our company’s history, we were not able to overcome the weak start to the month, which included the disruption of Hurricane Sandy. Yet we remain on track to deliver a very strong sales performance in the fourth quarter, consistent with our guidance.”

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At the end of November, Macy’s announced fourth-quarter fiscal 2013 EPS guidance in a range between $1.94 and $1.99, below I/B/E/S estimates of $2.01, but in line with analyst consensus of $1.99. Shares came down 3.99 percent between November 29 and December 27.

E = Equity to Debt Ratio is Unattractive

Macy’s debt-to-equity ratio of 1.25 compares unfavorably to its major competitors. It’s also important to consider total debt and total cash on hand, which for Macy’s is $6.94 billion in debt and $1.26 billion in cash.

This compares to J.C. Penney Company, Inc. (NYSE:JCP) with a debt-to-equity ratio of 0.85, total debt of $2.96 billion, and total cash of $525 million, and Kohl’s Corp. (NYSE:KSS), which has a debt-to-equity ratio of 0.75, with total debt of $4.58 billion and total cash of $550 million.

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