Starboard Value: Macy’s, Inc. (M) Real Estate Worth $21 Billion, Stock’s Market Cap $11.25 Billion


Sometimes the sum of the parts are greated than the whole, and that seems to be the case with Macy’s, Inc. (NYSE:M), at least if you were to ask activist investors, Starboard Value. The firm today, who holds a significant stake in Macy’s, Inc. (NYSE:M) stock, released a presentation which shows Macy’s real estate is valued at approximately $21 billion, while the company trades at a market cap of just $11.25 billion. Starboard goes on to point out this value descrepency and then puts forth a plan which could unlock what they say is $11 billion for shareholders.

Starboard suggests that Macy’s, Inc. (NYSE:M) create a joint venture, splitting their real estate assets from their core business.

“We believe that a JV, or series of JVs, can crystallize the value of Macy’s real estate while bringing in a partner with substantial capital and real estate expertise that will enable the JVs to grow and diversify their real estate holdings,” stated Starboard

Macy’s, Inc. (NYSE:M) shares have been down big over the last 6-7 months. In fact shares are trading at half of what they were back in July. The stock decreased 2.71% or $1 during the last trading session, hitting $35.89. Approximately 10,738 shares traded hands. M shares have declined 48.17% since June 5, 2015 and are currently downtrending. It has underperformed the S&P500 by 43.48%.

From a total of 23 analysts covering Macy’s Inc. (NYSE:M) stock, 7 rate it a “Buy”, 2 a “Sell”, and 14 a “Hold”. This means that 30% of the ratings are positive. The highest target price is $139.0 while the lowest target price is $38. The mean of all analyst targets is $61.73 which is 72.00% above today’s ($35.89) stock price. Macy’s Inc. was the topic of 35 analyst reports since July 24, 2015 according to the firm StockzIntelligence Inc. Goldman Sachs downgraded shares on December 4 to a “Neutral” rating. Barclays Capital maintained shares with a”Underweight” rating and a $38 target share price in their report from a November 12. Evercore downgraded M stock in a recent report from November 12 to a “Hold” rating. Cowen & Co maintained the rating on November 12. Cowen & Co has a “Market Perform” rating and a $42 price target on shares. Finally, Stifel Nicolaus maintained the stock with a “Buy” rating in a report they issued on a November 12.

Macy’s, Inc. is an omnichannel retail firm operating stores, Websites and mobile. The company has a market cap of $11.28 billion. As of January 31, 2015, the activities of the Company included 823 stores with an area of approximately 147,400,000 square feet in 45 states of the United States, the District of Columbia, Guam and Puerto Rico. It has 9.42 P/E ratio. Of these 823 stores, 447 were owned, 267 were leased and 109 stores were operated under arrangements where the Company owned the building and leased the land.