Macy’s (NYSE:M) and Sears Holdings Corporation (SHLD) Critical Comparison

Sears Holdings Corporation (NASDAQ: SHLD) and Macy’s (NYSE:M) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitabiliy and dividends.

Analyst Recommendations

This is a summary of recent ratings and price targets for Sears Holdings Corporation and Macy’s, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sears Holdings Corporation 1 0 0 0 1.00
Macy’s 1 15 6 0 2.23

Sears Holdings Corporation currently has a consensus target price of $4.00, suggesting a potential downside of 56.57%. Macy’s has a consensus target price of $31.47, suggesting a potential upside of 31.52%. Given Macy’s’ stronger consensus rating and higher probable upside, analysts clearly believe Macy’s is more favorable than Sears Holdings Corporation.

Insider & Institutional Ownership

65.5% of Sears Holdings Corporation shares are held by institutional investors. Comparatively, 84.5% of Macy’s shares are held by institutional investors. 89.0% of Sears Holdings Corporation shares are held by insiders. Comparatively, 1.4% of Macy’s shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Macy’s pays an annual dividend of $1.51 per share and has a dividend yield of 6.3%. Sears Holdings Corporation does not pay a dividend. Macy’s pays out 81.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sears Holdings Corporation has increased its dividend for 6 consecutive years.

Profitability

This table compares Sears Holdings Corporation and Macy’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sears Holdings Corporation -7.16% N/A -9.19%
Macy’s 2.26% 22.37% 4.58%

Earnings and Valuation

This table compares Sears Holdings Corporation and Macy’s’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sears Holdings Corporation $21.05 billion 0.05 -$1.07 billion ($14.08) -0.65
Macy’s $25.35 billion 0.29 $2.76 billion $1.85 12.94

Macy’s has higher revenue and earnings than Sears Holdings Corporation. Sears Holdings Corporation is trading at a lower price-to-earnings ratio than Macy’s, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Sears Holdings Corporation has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500. Comparatively, Macy’s has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Summary

Macy’s beats Sears Holdings Corporation on 12 of the 16 factors compared between the two stocks.

About Sears Holdings Corporation

Sears Holdings Corporation is an integrated retailer. The Company is the parent company of Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. (Sears). The Company’s segments are Kmart and Sears Domestic. It also offers Shop Your Way, a member-based social shopping platform that offers rewards and personalized services. The Company is the home appliance retailer, as well as offers tools, lawn and garden, fitness equipment, automotive repair and maintenance. Its brands include Kenmore, Craftsman and DieHard. It also maintains a range of apparel and home offering, including labels, such as Jaclyn Smith, Joe Boxer, Route 66, Cannon, Ty Pennington Style and Levi’s and also offers Lands’ End merchandise in some of its Full-line stores. As of January 28, 2017, it is also a provider of home services, with over four million service and installation calls made annually. As of January 28, 2017, it operated a network of stores with 1,430 full-line and specialty retail stores.

About Macy’s

Macy’s, Inc. is an omnichannel retail company operating stores, Websites and mobile applications under various brands, such as Macy’s, Bloomingdale’s and Bluemercury. The Company sells a range of merchandise, including apparel and accessories (men’s, women’s and children’s), cosmetics, home furnishings and other consumer goods. Its subsidiaries provide various support functions to its retail operations. Its bank subsidiary, FDS Bank, provides credit processing, certain collections, customer service and credit marketing services in respect of all credit card accounts that are owned either by Department Stores National Bank (DSNB), which is a subsidiary of Citibank N.A., or FDS Bank. The private label brands offered by the Company include Alfani, American Rag, Aqua, Bar III, Belgique, Charter Club, Club Room, Epic Threads, first impressions, Giani Bernini, Greg Norman for Tasso Elba, Holiday Lane, Home Design, Hotel Collection, John Ashford, Karen Scott, Thalia Sodi and lune+aster.

Receive News & Ratings for Sears Holdings Corporation Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Sears Holdings Corporation and related companies with MarketBeat.com's FREE daily email newsletter.

Latest News

Leave a Reply