Department store stocks in Macy’s (M) and Dillard’s (DDS) have been posting very strong earnings. Both companies beat expectations by a significant margin due to strong in-person and digital sales. Patrick Ryan breaks down which is the better buy.Department store stocks have been quite strong as they are benefitting from the economy's reopening as foot traffic to stores has been rebounding strongly. Additionally, many of them were able to grow e-commerce sales and this part of their business is also in growth mode. Before the pandemic, department store stocks were struggling. However, in the aftermath of the pandemic, it's possible that conditions have improved and the boom in digital and in-person sales will continue. Below, we provide a look at two of the most intriguing department store stocks in Macy’s (M) and Dillard’s (DDS).
M is proactively attempting to adapt to the ever-changing retail ecosystem. M has implemented several key changes including a mobile-first strategy, a loyalty program, store pickup, and additional features to win new business both online and offline. After all, the enthusiasm for in-person shopping at conventional retail stores will eventually wane, shifting the spotlight back to web-based sales.
M has a forward P/E ratio of 7.83. This is one of the lower P/E ratios you will find, indicating the stock is likely underpriced at $17.42 per share. If M pops this summer or fall, it has the potential to break through its 52-week high of $22.30. M has a beta of 2.08 so it will prove somewhat volatile if the market soars or plummets.