Comparing Macy’s (NYSE:M) & J. C. Penney (NYSE:JCPNQ)

Macy’s (NYSE:M) and J. C. Penney (OTCMKTS:JCPNQ) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, valuation, risk and analyst recommendations.

Institutional and Insider Ownership

90.3% of Macy’s shares are held by institutional investors. Comparatively, 57.1% of J. C. Penney shares are held by institutional investors. 0.6% of Macy’s shares are held by insiders. Comparatively, 3.0% of J. C. Penney shares are held by 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.

Earnings and Valuation

This table compares Macy’s and J. C. Penney’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Macy’s $24.56 billion 0.09 $564.00 million $2.91 2.36
J. C. Penney $11.17 billion 0.01 -$268.00 million ($0.80) -0.42

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

Analyst Ratings

This is a summary of recent ratings and price targets for Macy’s and J. C. Penney, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Macy’s 8 5 1 0 1.50
J. C. Penney 0 0 0 0 N/A

Macy’s currently has a consensus target price of $9.73, indicating a potential upside of 41.44%. Given Macy’s’ higher probable upside, equities research analysts clearly believe Macy’s is more favorable than J. C. Penney.

Profitability

This table compares Macy’s and J. C. Penney’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Macy’s -1.01% 2.24% 0.65%
J. C. Penney -2.40% -27.83% -3.09%

Volatility & Risk

Macy’s has a beta of 1.54, meaning that its share price is 54% more volatile than the S&P 500. Comparatively, J. C. Penney has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.

Summary

Macy’s beats J. C. Penney on 11 of the 13 factors compared between the two stocks.

About Macy’s

Macy's, Inc., an omnichannel retail organization, operates stores, Websites, and mobile applications. The company sells a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. As of April 1, 2019, it operated approximately 680 department stores under the Macy's and Bloomingdale's names; and 190 specialty stores, such as Bloomingdale's The Outlet, Bluemercury, Macy's Backstage, and STORY in 43 states, the District of Columbia, Guam, and Puerto Rico. It also operated macys.com, bloomingdales.com, and bluemercury.com. In addition, the company offers licenses for its stores; and operates a beauty products and spa retailer under the bluemercury name. The company was formerly known as Federated Department Stores, Inc. and changed its name to Macy's, Inc. in June 2007. Macy's, Inc. was founded in 1830 and is based in Cincinnati, Ohio.

About J. C. Penney

J. C. Penney Company, Inc., through its subsidiary J. C. Penney Corporation, Inc., sells merchandise through department stores. The company primarily sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products, and home furnishings; and provides services, including styling salon, optical, portrait photography, and custom decorating services. As of March 31, 2020, it operated approximately 850 stores in the United States and Puerto Rico. The company also sells its products through its Website, jcpenney.com. The company was founded in 1902 and is based in Plano, Texas. On May 15, 2020, J. C. Penney Company, Inc., along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas.

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