Highlights

  • Macy's shows 55.46% one-year basic EPS growth, a P/E of 8.78 and PEG of 0.47.
  • Second quarter net income was $169 million, against $87 million a year earlier.
  • Comparable sales rose 2.7%; Bloomingdale's rose 11.3% and Bluemercury 6.2%.
  • Full-year adjusted diluted EPS guidance rose to $2.15 to $2.35; $1,024 million of buybacks remain.

Growth, P/E and PEG sit side by side at Macy's (NYSE:M), an undervalued growth stock: basic earnings per share grew 55.46% over one year, the trailing twelve-month P/E ratio is 8.78 and the PEG ratio, on an expected basis, is 0.47, with shares trading at USD 23.80 on October 28, 2026, down 0.27%. In its latest disclosures, the omni-channel retailer received $98 million of tariff refunds in the second quarter, declared a regular quarterly dividend of 19.15 cents per share on August 28, and reported second quarter 2026 net income of $169 million on September 10.

Macy's, Inc. is headquartered at 151 West 34th Street in New York, New York, and is incorporated in Delaware. It describes itself as an omni-channel retail organization operating stores, websites and mobile applications under three nameplates: Macy's, Bloomingdale's and Bluemercury. It sells apparel and accessories, cosmetics, home furnishings and other consumer goods, with stores in 43 states, the District of Columbia, Puerto Rico and Guam, and reports one segment.

Growth: Second Quarter Earnings, Comparable Sales and Gross Margin

Net income was $169 million in the 13 weeks ended August 1, 2026, against $87 million a year earlier, and $232 million for the 26 weeks against $124 million. Basic earnings per share were $0.64 against $0.32 in the quarter and $0.88 against $0.45 for the half, and diluted earnings per share were $0.62 against $0.31. Non-GAAP adjusted diluted earnings per share were $0.63 against $0.35.

Total revenue was $5,059 million against $4,999 million, with net sales of $4,866 million against $4,812 million, up 1.1%. Macy's, Inc. comparable sales increased 2.7%. On a go-forward basis, Macy's comparable sales increased 1.1%, Bloomingdale's 11.3% and Bluemercury 6.2%.

Gross margin was $2,018 million, or 41.5% of net sales, against $1,912 million, or 39.7%. The company said the 180 basis point increase in the gross margin rate came mainly from gross tariff refunds of approximately $95 million.

Valuation: P/E of 8.78, PEG of 0.47 and Cash Generation

The P/E ratio of 8.78 is measured on trailing twelve-month earnings, and the PEG ratio of 0.47 on expected growth. Net cash provided by operating activities was $586 million for the 26 weeks against $255 million, which the company attributed primarily to $328 million received in the first quarter from settlements of credit card interchange fee litigation in which it was a plaintiff.

Shareholders' equity was $4,928 million at August 1, 2026, against $4,451 million at August 2, 2025. Management on the call did not comment on the company's P/E or valuation.

Capital Returns, Cash and Debt

Cash and cash equivalents were $1,294 million at August 1, 2026, against $829 million a year earlier. The company had no borrowings under its $2,100 million asset-based credit facility, which matures in April 2030, and borrowing availability was $1,958 million after $142 million of standby letters of credit. Long-term debt was $2,433 million.

Macy's repurchased approximately 2.2 million shares for about $50 million in the second quarter, and approximately 4.9 million shares for about $100 million in the first half at an average cost of $20.48 per share. As of August 1, 2026, $1,024 million remained under the $2,000 million program authorized February 22, 2022, which has no expiration date. Dividends paid totaled $101 million for the half. The August 28 dividend of 19.15 cents per share is payable October 1, 2026.

Disclosed Risks and Outlook for Fiscal 2026

The company said big-ticket categories underperformed the second quarter of 2025, though they were better than in the first quarter of 2026, and that closing 14 non-go-forward locations at the end of fiscal 2025 reduced net sales by $35 million. The forward-looking statements cite competitive pressure, consumer spending levels, tariffs, declines in credit card revenues and the level of indebtedness.

On the second quarter call held September 10, management raised full-year guidance. It now expects net sales of $21.675 billion to $21.825 billion, comparable sales growth of 1.0% to 1.5% and interest expense of roughly $90 million. Adjusted diluted EPS guidance was increased to $2.15 to $2.35, with adjusted EBITDA at 7.8% to 8.0% of total revenue.

For the third quarter, management guided to net sales of $4.65 billion to $4.7 billion and adjusted diluted EPS of a loss of $0.19 to $0.23. Management said it will flow about $0.05 per share of the $116 million in total tariff refunds to earnings and reinvest the rest.