Financial Survey: Macy’s (NYSE:M) & LY (OTCMKTS:YAHOY)

LY (OTCMKTS:YAHOY) and Macy’s (NYSE:M) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, institutional ownership, profitability and earnings.

Volatility and Risk

LY has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500. Comparatively, Macy’s has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500.

Institutional & Insider Ownership

87.4% of Macy’s shares are held by institutional investors. 1.1% of Macy’s shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares LY and Macy’s”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LY	$13.53 billion	1.74	$1.28 billion	$0.39	17.49
Macy’s	$22.62 billion	0.25	$642.00 million	$2.73	8.05

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for LY and Macy’s, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LY	0	2	0	0	2.00
Macy’s	2	9	2	0	2.00

Macy’s has a consensus price target of $22.78, indicating a potential upside of 3.70%. Given Macy’s’ higher possible upside, analysts plainly believe Macy’s is more favorable than LY.

Profitability

This table compares LY and Macy’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LY	6.24%	5.49%	1.80%
Macy’s	3.29%	13.21%	3.83%

Dividends

LY pays an annual dividend of $0.10 per share and has a dividend yield of 1.5%. Macy’s pays an annual dividend of $0.77 per share and has a dividend yield of 3.5%. LY pays out 25.6% of its earnings in the form of a dividend. Macy’s pays out 28.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Macy’s has raised its dividend for 4 consecutive years. Macy’s is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Macy’s beats LY on 11 of the 16 factors compared between the two stocks.

About LY

LY Corporation engages in the online advertising and e-commerce businesses in Japan. The company provides LINE, a communication app; and Yahoo! JAPAN, an internet service that offers search, news, weather, shopping, auction, and other services. It also offers reuse, membership, and payment-related services. The company was formerly known as Z Holdings Corporation and changed its name to LY Corporation in October 2023. LY Corporation was founded in 1996 and is headquartered in Chiyoda, Japan. LY Corporation operates as a subsidiary of A Holdings Corporation.

About Macy’s

Macy’s, Inc. engages in the retail of apparel, accessories, cosmetics, home furnishings, and other consumer goods. The firm’s brands include Macy’s, Bloomingdale’s, and Bluemercury. It offers men’s, women’s, and children’s apparel, women’s accessories, intimate apparel, shoes, cosmetics, fragrances, as well as home and miscellaneous products. The company was founded by Rowland H. Macy in 1858 and is headquartered in New York, NY.