Investment Thesis
Macy's exhibits severe financial distress with interest coverage of 0.8x, indicating inability to service debt from operations. Despite 3.9% revenue growth, profitability remains critically weak (1.3% net margin, 0.4% ROA), suggesting fundamental business challenges in a mature retail segment.
Strengths
- Positive free cash flow of $204M provides near-term liquidity buffer
- Modest revenue growth of 3.9% YoY demonstrates market resilience
- Reasonable debt-to-equity ratio of 0.50x limits leverage risk relative to assets
Risks
- Interest coverage of 0.8x indicates operating income cannot cover interest expense—unsustainable debt service
- Critically low profitability metrics (1.3% net margin, 0.4% ROA, 1.3% ROE) show minimal shareholder value creation
- Flat net income growth (0.0% YoY) despite 3.9% revenue increase signals margin compression and operational stress
Key Metrics to Watch
- Interest coverage ratio—must exceed 1.5x to signal debt sustainability
- Operating margin expansion—structural improvement needed to generate debt service capacity
- Quick ratio deterioration—indicator of liquidity stress given inventory-dependent business model
Financial Metrics
Revenue
4.9B
Net Income
63.0M
EPS (Diluted)
$0.23
Free Cash Flow
204.0M
Total Assets
16.3B
Cash
1.3B
Profitability Ratios
Gross Margin
198.0%
Operating Margin
2.3%
Net Margin
1.3%
ROE
1.3%
ROA
0.4%
FCF Margin
4.2%
Balance Sheet & Liquidity
Current Ratio
1.48x
Quick Ratio
0.44x
Debt/Equity
0.50x
Debt/Assets
0.0%
Interest Coverage
0.81x
Long-term Debt
2.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-06-05T07:34:28.760029 |
Data as of: 2026-05-02 |
Powered by Claude AI