Head-To-Head Review: Sears Holdings Corporation (SHLD) vs. Macy’s (M)

Macy’s (NYSE: M) and Sears Holdings Corporation (NASDAQ:SHLD) are both retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitabiliy, institutional ownership and earnings.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Macy’s and Sears Holdings Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Macy’s 1 15 6 0 2.23
Sears Holdings Corporation 1 0 0 0 1.00

Macy’s currently has a consensus target price of $31.47, suggesting a potential upside of 37.26%. Sears Holdings Corporation has a consensus target price of $4.00, suggesting a potential downside of 40.03%. Given Macy’s’ stronger consensus rating and higher probable upside, research analysts clearly believe Macy’s is more favorable than Sears Holdings Corporation.

Volatility and Risk

Macy’s has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Sears Holdings Corporation has a beta of 1.62, suggesting that its stock price is 62% more volatile than the S&P 500.

Dividends

Macy’s pays an annual dividend of $1.51 per share and has a dividend yield of 6.6%. Sears Holdings Corporation does not pay a dividend. Macy’s pays out 81.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Macy’s has raised its dividend for 6 consecutive years.

Profitability

This table compares Macy’s and Sears Holdings Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Macy’s 2.26% 22.37% 4.58%
Sears Holdings Corporation -7.16% N/A -9.19%

Institutional and Insider Ownership

86.3% of Macy’s shares are held by institutional investors. Comparatively, 66.1% of Sears Holdings Corporation shares are held by institutional investors. 1.4% of Macy’s shares are held by company insiders. Comparatively, 89.0% of Sears Holdings Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Macy’s and Sears Holdings Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Macy’s $25.35 billion 0.28 $2.76 billion $1.85 12.39
Sears Holdings Corporation $21.05 billion 0.03 -$1.07 billion ($14.08) -0.47

Macy’s has higher revenue and earnings than Sears Holdings Corporation. Sears Holdings Corporation is trading at a lower price-to-earnings ratio than Macy’s, indicating that it is currently the more affordable of the two stocks.

Summary

Macy’s beats Sears Holdings Corporation on 13 of the 16 factors compared between the two stocks.

About Macy’s

Macy’s, Inc. is an omnichannel retail company operating stores, Websites and mobile applications under various brands, such as Macy’s, Bloomingdale’s and Bluemercury. The Company sells a range of merchandise, including apparel and accessories (men’s, women’s and children’s), cosmetics, home furnishings and other consumer goods. Its subsidiaries provide various support functions to its retail operations. Its bank subsidiary, FDS Bank, provides credit processing, certain collections, customer service and credit marketing services in respect of all credit card accounts that are owned either by Department Stores National Bank (DSNB), which is a subsidiary of Citibank N.A., or FDS Bank. The private label brands offered by the Company include Alfani, American Rag, Aqua, Bar III, Belgique, Charter Club, Club Room, Epic Threads, first impressions, Giani Bernini, Greg Norman for Tasso Elba, Holiday Lane, Home Design, Hotel Collection, John Ashford, Karen Scott, Thalia Sodi and lune+aster.

About Sears Holdings Corporation

Sears Holdings Corporation is an integrated retailer. The Company is the parent company of Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. (Sears). The Company’s segments are Kmart and Sears Domestic. It also offers Shop Your Way, a member-based social shopping platform that offers rewards and personalized services. The Company is the home appliance retailer, as well as offers tools, lawn and garden, fitness equipment, automotive repair and maintenance. Its brands include Kenmore, Craftsman and DieHard. It also maintains a range of apparel and home offering, including labels, such as Jaclyn Smith, Joe Boxer, Route 66, Cannon, Ty Pennington Style and Levi’s and also offers Lands’ End merchandise in some of its Full-line stores. As of January 28, 2017, it is also a provider of home services, with over four million service and installation calls made annually. As of January 28, 2017, it operated a network of stores with 1,430 full-line and specialty retail stores.

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