Premier omnichannel retailer Macy's (NYSE:M) has delivered solid top and bottom-line performance in the last reported quarter, driven by accelerated investments in digital platforms, and strong demand for luxury items with consumers gradually returning to pre-pandemic lifestyles. Given the company’s solid growth prospects, M looks undervalued at the current price level. While the stock declined 7.9% over the past month, is it poised to soar in the near term? Let’s discuss.Omnichannel retailer Macy's, Inc. (M) operates stores, mobile applications, as well as websites under the brand names — Macy's, Bloomingdale's, and Bluemercury. The retailer exceeded sales expectations across all brands in its last quarter. M’s stock gained 52.6% so far this year and 161.7% over the past year. Strong demand for health & wellness, pet, home décor, and other luxury items, coupled with accelerated use of the company’s Polaris (NYSE:PII) strategy, which includes investing heavily in digital platforms, should enable M to maintain growth this year and beyond.
Given the company’s promising financial and solid growth prospects, M looks undervalued at the current price level. The stock’s forward non-GAAP P/E ratio of 8.72 is 47.5% lower than the industry average of 16.59.
The company’s cash stood at $1.8 billion at the end of the first quarter of 2021, primarily due to more efficient use of capital compared to pre-pandemic levels. Its digital sales surged 34% year-over-year, while comparable sales increased 62.5% on an owned basis compared to the first quarter of 2020.