Macy's: An Undervalued Hidden Asset Play

Excerpt

The following is a 250-word excerpt from my full article on Seeking Alpha: A crowdsourced financial market content service where investors can share ideas, discuss news, and make informed investment decisions. To view the full article without a paywall, please click on the link below:
https://seekingalpha.com/article/4774728?gt=83287af33219ea82

Investment Thesis

I give Macy's Inc. (NYSE:M) stock a buy rating due to the company’s strong cash flow, high-quality earnings, their shares trading at a discount of $7.02, 39% below their intrinsic value, a low price-to-book ratio of 0.68—much lower than that of its peers and the S&P 500—and a hidden real estate value of $20.74 per share, meaning that investors who purchase Macy’s shares are getting in on the company’s retail operations for free.

Background

My first article on Seeking Alpha was on Macy's, Inc. over six months ago. I gave the company a hold rating, and much of that article was spent discussing Macy's "Bold New Chapter" strategy in detail. However, after publishing the article, one of the commenters, SGA430, asked if I knew if there was a real estate valuation of Macy's on a per stock basis.

Comments on other Macy's analyses, such as this bearish article, makes the claim that half of Macy's real estate (at the time the comment was published in September 2024) is worth their current market cap, hence why their buyout offers from Arkhouse and Brigade Capital Management were much higher than the price per share reflected by the market:

So, what I would like to do in this article is to get into the numbers of Macy's real estate to better assess the company as a hidden asset play and to get Macy's hidden real estate valuation on a per stock basis.

However, I would like to start by first giving two valuations…