Investors have resurfaced interest in Macy’s after Berkshire Hathaway’s management added shares of the department-store chain, underscoring a view that the stock’s apparent valuation discount may reflect more than just weak fundamentals. The attention comes as Macy’s posts renewed momentum in sales growth and draws support from a substantial real-estate footprint that some analysts say could be worth more than the company’s market value.
Key takeaways
- Price move: The article highlights a valuation discount for Macy’s associated with a low price-to-earnings multiple.
- Catalyst: Berkshire Hathaway added shares while Macy’s reported its strongest first-quarter sales performance in four years and raised full-year sales guidance.
- Key implication: The investment case rests on the belief that Macy’s real-estate holdings and returning sales growth could support a higher intrinsic value than the stock price implies.
- Capital return: The retailer pays a dividend of nearly $0.77 per share (about a 3% yield) and has increased the payout by 5%.
Berkshire Hathaway’s renewed interest
Berkshire Hathaway’s added position in Macy’s is notable because the conglomerate has often been associated with value-oriented investing, including periods when the retailer faced prolonged headwinds from high costs and shifting mall traffic patterns. While Berkshire has been a net seller of stocks in general, the decision to buy Macy’s aligns with the idea that the stock may be mispriced relative to assets and improving operating trends.
In the article, the valuation backdrop is framed around Macy’s low price-to-earnings ratio, which is described as having traded as low as 7.5 during the first quarter of 2026 and is currently cited as 10. However, the piece argues that investors should not rely solely on that multiple when judging whether the stock is “cheap.”
What drives the “cheap” valuation argument
The article points to several factors that may help explain why Macy’s trades at a discount versus peers:
- Market positioning and competitive pressure: Macy’s operates from a mid-tier to upscale position, at a time when some department-store competitors have struggled sharply. The article cites peers such as JCPenney and Neiman Marcus that have declared bankruptcy, and notes prolonged sales declines at Kohl’s.
- Peer comparison: The article contrasts Macy’s valuation with large retailers and other chains that have historically traded at higher earnings multiples, including Walmart and Costco, along with Target at a higher stated P/E.
The core premise is that Macy’s valuation reflects the market’s view of ongoing business risks, yet those risks may be moderating as sales growth returns.
Sales recovery and guidance support
A central part of the renewed investment case is improvement in Macy’s revenue trajectory. According to the article, Macy’s reported its strongest Q1 in four years, with net sales rising in the first quarter of fiscal 2026 (ended May 2) and raising its net sales guidance for the fiscal year.
As described in the piece, comparable sales for fiscal 2026—previously expected to be flat at the midpoint—are now expected to rise between 0.5% and 1.2%. For investors, the key takeaway is that the stock’s valuation argument is being reinforced by a shift from declining sales to a modest growth outlook.
Real estate value and dividend capacity
Beyond earnings multiples, the article highlights the balance-sheet and shareholder-return angle. It says Macy’s owns much of its real estate and references estimates from Thor Equities and Barington Capital that place real-estate holdings at up to $9 billion. With the article citing a market capitalization around $6.7 billion, it frames the asset base as a potential source of downside protection if those estimates prove accurate.
The dividend is also positioned as a measurable component of the total shareholder return while investors wait for operating improvements. The article states Macy’s pays a yearly dividend of almost $0.77 per share, implying a yield around 3%, and that the company increased the payout by 5% recently. It also says the payout cost was $196 million over the trailing 12 months, compared with more than $1.4 billion in free cash flow generated during the same period.
The piece adds that the payout remains below the $1.51-per-share annual dividend maintained prior to the pandemic, but argues that the current dividend helps compensate investors for the period required for sales momentum to translate into stronger earnings power.
What to watch next
For investors monitoring Macy’s turnaround prospects, the next steps likely hinge on whether the retailer can sustain the sales-growth trend reflected in its strong Q1 and raised guidance. Attention will also remain on the durability of free cash flow that supports the dividend, and on whether management can continue narrowing the gap between market valuation and the real-estate-backed asset value highlighted in estimates. With the sales outlook now under revised assumptions, upcoming earnings reports and further guidance updates will be the primary catalysts for reassessing the stock’s valuation.
