• If you are wondering whether Macy's current share price really reflects what the company is worth, the next sections will walk through that question in plain terms.
• The stock closed at US$20.00 most recently, with returns of 8.5% over the past week, 0.3% over the past month, a decline of 12.1% year to date, and 80.1% over the past year. This naturally raises questions about how much future upside or risk is already priced in.
• Recent headlines have focused on Macy's as a listed U.S. retailer at a time when the broader multiline retail sector is under close watch. This helps frame these moves in the stock. Investors are weighing how news about consumer demand, store footprint decisions, and competition in U.S. retail might influence what counts as a fair price for the shares.
• Against that backdrop, Macy's currently scores 5 out of 6 on a set of valuation checks. The rest of this article will walk through the main valuation approaches investors often use, before finishing with a broader way to think about what that score really means.

Approach 1: Macy's Discounted Cash Flow (DCF) Analysis

Approach 1: Macy's Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of a company’s future cash flows and discounts them back to today’s dollars, to give a single estimate of what the equity could be worth right now.

For Macy's, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $578.2 million. Analysts provide forecasts out to 2028, with Simply Wall St extrapolating further to build a 10 year path. Within that, projected free cash flow reaches $1,069.6 million in 2035, with each year’s figure discounted back to today using the model’s assumptions.

Adding those discounted cash flows together and factoring in the second stage produces an estimated intrinsic value of about $33.73 per share. Against a recent share price of around $20.00, the model implies Macy's stock trades at roughly a 40.7% discount to this DCF estimate, which indicates that the shares appear undervalued on this measure alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Macy's is undervalued by 40.7%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Macy's Price vs Earnings (P/E)

For a profitable company like Macy's, the P/E ratio is a useful shorthand for how much investors are paying for each dollar of earnings. It links directly to what the business is currently earning, which many investors find easier to anchor to than long range cash flow forecasts.

What counts as a "normal" P/E depends on what the market expects for future growth and how risky those earnings are perceived to be. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher perceived risk typically points to a lower one.

Macy's currently trades on a P/E of 8.22x. That sits below the Multiline Retail industry average P/E of 19.06x and also below a peer group average of 14.77x. Simply Wall St’s Fair Ratio for Macy's is 14.04x. This is a proprietary estimate of what P/E might be reasonable after adjusting for factors such as earnings growth profile, profit margins, industry, market cap and company specific risks, rather than just comparing with peers.

Because Macy's current P/E of 8.22x is below the Fair Ratio of 14.04x, the shares appear inexpensive on this multiple based view.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Macy's Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach a clear story about Macy's to the numbers by linking your view on its future revenue, earnings and margins to a Fair Value that you can compare with the current share price. This can help you decide whether to wait, buy, or sell. Every Narrative lives on the Community page, where it updates automatically as new earnings or news arrive. Different views already coexist there, from more cautious takes that focus on long term pressure on store traffic and margins and arrive at Fair Values around US$6.00 per share, through middle of the road views closer to about US$19.40, right up to more optimistic perspectives that factor in real estate, omni channel investments and brand initiatives and land near US$25.00. All of these use the same easy framework so you can quickly see which story you actually agree with.

For Macy's, we will make it really easy for you with previews of two leading Macy's Narratives:

Fair Value: US$24.43 per share

Implied undervaluation vs current US$20.00 price: about 18.1%

Revenue growth assumption: 5.57%

• Macy's owns a sizable real estate portfolio that could be used to raise about US$600m to US$750m over three years to support liquidity, reduce debt, and fund new investments.
• More than US$7b in annual digital sales positions Macy's as a large e commerce player in the U.S., and management is working on a media network to monetize online traffic.
• The bull view sits alongside concerns that long running store closures, turnaround efforts, and pressure on sales and margins mean the underlying business still faces structural challenges.

Fair Value: US$19.40 per share

Implied overvaluation vs current US$20.00 price: about 3.1%

Revenue growth assumption: revenue is expected to decline by about 6.40% per year

• This narrative highlights omni channel investments, store optimization, and the Reimagine 125 program as key drivers for customer satisfaction, efficiency, and margins, while also pointing to ongoing execution risk.
• It assumes revenue of US$18.6b and earnings of US$646.0m by about April 2029, with the stock trading on a P/E of 10.1x and analysts clustering around a US$19.40 price target.
• Risks include continued pressure from e commerce rivals, margin headwinds from tariffs and costs, reliance on discretionary spending, and the possibility that store remodels and digital investments do not translate into the expected uplift in growth and profitability.

To see how these different stories connect to long term growth assumptions, risks, and valuation ranges for Macy's, it helps to read the full narrative set side by side before deciding which one you find most convincing. To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Macy's on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Do you think there's more to the story for Macy's? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.