Some Retailers’ Stocks Have Gotten Really Cheap. Buyer Beware.

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Investors might be surprised to hear how cheap some common retail names have gotten.

Macy’s, JCPenney, and other once-big retailers remain household names, even as their sector footprint has significantly shrunk.

Today, Macy’s market value is less than $3 billion, and its valuation has been similarly diminished: The stock changes hands for just 3.8 times forward earnings, according to FactSet. That makes it the 10th-cheapest stock in the S&P 1500 and the cheapest retailer in the index. Hibbett’s valuation is no shock either. While athletic retailers’ shares surged during the pandemic, the market has been skeptical of the group’s ability to keep growing, despite ongoing strength. Fellow smaller player Academy Sports & Outdoors has a forward price-to-earnings ratio of just 6.5, while the biggest of the bunch, Dick’s Sporting Goods , trades at just 9 times.

UBS analyst Jay Sole reiterated is overall bearish outlook for soft line retailers, which sell softgoods like clothing for both the near term and the next year.

 

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