• Considering whether Macy's at around US$23.16 still offers value, or if most of the opportunity is already reflected in the price.
• The stock has returned 6.2% over the past week, 23.9% over the last month, 1.8% year to date, and 99.2% over the past year. These figures may influence how you think about both upside and risk.
• Recent headlines have focused on Macy's as a turnaround story and on investor interest in potential changes to its store footprint and real estate usage. There has also been attention on how the company positions itself in US retail, which provides context for the stock's recent returns.
• Macy's currently holds a valuation score of 5/6. The next step is a closer look at what different valuation methods indicate about the stock today, and why a more holistic way to think about value at the end of this article could be even more important.

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

A Discounted Cash Flow model takes Macy's projected future cash flows and discounts them back to today, aiming to estimate what the entire business could be worth in today's dollars.

Macy's last twelve months Free Cash Flow is about $966.0 million. Analyst estimates and extrapolated figures suggest Free Cash Flow projections between $664.5 million in 2026 and $1,077.6 million by 2035, with Simply Wall St extending forecasts beyond the initial analyst window. All of these cash flows are modelled in $ and then discounted using a 2 Stage Free Cash Flow to Equity approach.

On this basis, the DCF model points to an estimated intrinsic value of about $37.75 per share. Compared with the recent share price around $23.16, this implies the stock is 38.7% undervalued, according to this single model. For readers focused on cash generation, the DCF suggests Macy's may offer a valuation cushion at current levels.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Macy's is undervalued by 38.7%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.

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

For profitable companies like Macy's, the P/E ratio is a useful way to relate what you pay for each share to the earnings the business is already generating. It lets you compare how the market is pricing those earnings relative to other stocks in the same space.

In general, higher expected earnings growth and lower perceived risk can support a higher P/E, while slower growth or higher risk usually justify a lower one. Macy's current P/E is 9.13x. That sits below both the Multiline Retail industry average of 18.56x and the peer group average of 15.08x, which gives a first sense of how the stock is priced against similar companies.

Simply Wall St's Fair Ratio for Macy's is 12.41x. This is a proprietary estimate of what a reasonable P/E could be, given factors such as earnings growth, industry, profit margins, market cap and key risks. Because it blends these company specific drivers, the Fair Ratio can be more tailored than a simple comparison with broad industry or peer averages. Setting the Fair Ratio of 12.41x against the current P/E of 9.13x suggests the stock is trading below this model based reference point.

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 are introduced here as short, clear stories that you create about Macy's that sit behind the numbers. They link your view of its real estate plans, digital scale and competitive pressures to a set of revenue, earnings and margin assumptions. Simply Wall St then turns these into a fair value that you can compare with the current price, track on the Community page alongside other investors, and see update automatically when new earnings or news arrive. One investor might build a more optimistic Macy's Narrative closer to a US$25.00 fair value, while another might lean toward a more cautious view nearer US$9.00, yet both are using the same tool to decide how the current price lines up with their own story.

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

Fair value: US$24.43

Valuation gap: about 5.2% below this narrative fair value at the recent US$23.16 share price

Revenue growth assumption: 5.57%

• Highlights the value of Macy's owned real estate, with planned real estate sales of about US$600m to US$750m over three years to support liquidity, debt reduction, and reinvestment.
• Emphasizes Macy's position in US e commerce, with more than US$7b in annual digital sales and plans to build a media network around that online traffic.
• Balances the positive case with concerns that long running turnaround efforts, potential takeover disappointment, and past pressure on sales and margins could limit how close results come to historical peaks.

Fair value: US$21.50

Valuation gap: about 7.7% above this narrative fair value at the recent US$23.16 share price

Revenue growth assumption: revenue is assumed to decline 4.57% a year

• Focuses on omni channel investments, store optimization and the "Reimagine 125" program aimed at improving customer satisfaction, store productivity, and net margins.
• Sees opportunity in luxury and off price banners, private label development, and brand partnerships, alongside cost savings and automation efforts, but ties these to modest earnings expectations.
• Flags key risks around pressure from e commerce rivals, reliance on discretionary spending, margin headwinds from tariffs and pricing, and the need for ongoing store and SG&A efficiency to support the outlook.

These narratives sit alongside the DCF and P/E results to give you a structured way to test your own view against different assumptions, rather than relying on a single number.

To go deeper on how valuation, risks, and long term growth stories connect for Macy's, it can help to review the community's full set of narratives. You can then track how they evolve as new earnings and news arrive, using tools that update the fair value for you over time.

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.