Recent Price Moves Put Macerich Back on Investor Radars

Macerich (MAC) has moved sharply in recent trading, with the stock up 4.2% on the day and posting double digit gains over the past week, month, and past 3 months.

At a share price of $25.41, Macerich sits on a year to date share price return of 37.2% and a 1 year total shareholder return of 66.21%, suggesting momentum has been building over both shorter and longer periods.

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With Macerich trading close to the average analyst price target yet carrying an estimated 32.43% intrinsic discount, along with recent revenue and net income growth, you have to ask: is there real value left here, or is the market already pricing in future growth?

Most Popular Narrative: 4.5% Overvalued

The most followed valuation narrative for Macerich pegs fair value at $24.31 using an 8.38% discount rate, compared with the recent $25.41 share price.

Analysts are assuming Macerich's revenue will remain fairly flat over the next 3 years. Analysts assume that profit margins will increase from -18.0% today to 4.9% in 3 years time.

Curious what kind of profit swing and valuation multiple are being used to justify that fair value? The narrative leans on a sharp earnings turnaround, modest top line shifts, and a future earnings multiple that stands well above the broader Retail REITs sector.

Result: Fair Value of $24.31 (OVERVALUED)

However, Macerich still carries high leverage and relies on asset sales and refinancing, while ongoing e commerce pressure on traditional malls could challenge occupancy and rental income.

Another View On Macerich’s Valuation

The first narrative suggests Macerich is about 4.5% overvalued versus a fair value of $24.31, yet our DCF model points in the opposite direction, with the stock trading at a 32.4% discount to an estimated future cash flow value of $37.60. Which storyline do you think better fits your own assumptions?

For a closer look at how those long term cash flows are treated in the model, including the discount rate and growth inputs, it is worth reviewing the SWS DCF model in detail via the Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Macerich for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 44 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With opinions split on whether Macerich still offers value, it helps to look at the same numbers yourself, act while the data is fresh, and weigh the stock's balance of 2 key rewards and 3 important warning signs

Looking For More Investment Ideas Beyond Macerich?

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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.