Nordstrom, Inc. (JWN), Kohl’s Corporation (KSS): Why Macy’s, Inc. (M)’s Earnings Miss Isn’t as Bad as You Might Think

Moreover, as a whole, consumer discretionary stocks have “tallied the second-best earnings growth of the 10 S&P 500 industry sectors, with 8.5 percent growth in the second quarter,” according to data from Thomson Reuters. As more retailers release earnings in the coming week, investors should remember to take a long-term view.

Sure, Macy’s quarterly results weren’t great, but one quarter of down sales doesn’t merit selling the stock. The market reacted to the fact that Macy’s missed earnings for the first time in 25 straight quarters. However, that’s hardly a reason to cash out, especially if you’re a long-term investor.

In an industry as competitive as retail, Macy’s stock still looks attractive at where it trades today, around $46 or just 10 times forward earnings. For comparison, shares of Nordstrom, Inc. (NYSE:JWN) currently trade around $57 apiece at nearly 14 times next year’s earnings, while Kohl’s Corporation (NYSE:KSS) trades at 11 times forward earnings and will cost you about $52 a share. With Nordstrom, Inc. (NYSE:JWN) and Kohl’s Corporation (NYSE:KSS) both trading at pricier multiples than Macy’s today, I think there’s more upside for Macy’s stock from here.

Importantly, Macy’s, Inc. (NYSE:M) continues to reward shareholders through share repurchases as well as dividend payouts. In fact, Macy’s share repurchases were better than expected in the recent quarter, according to Citigroup analyst Deborah Weinswig. In May, Macy’s boosted its quarterly dividend by 25% and increased its share buyback program by $1.5 billion, according to The Wall Street Journal. Together, these things tell me that Macy’s is still a winning stock even in the face of a challenging retail environment.

The article Why Macy’s Earnings Miss Isn’t as Bad as You Might Think originally appeared on Fool.com and is written by Tamara Rutter.

Fool contributor Tamara Rutter has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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