Macy's (Macy's) Predictability Rank

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What is Macy's Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Macy's Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Macy's (Macy's) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » Macy's Inc (NYSE:M) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

M:Mexico FDO:Germany FDO:Germany MACY34:Brazil MACY:Austria

Address

151 West 34th Street, New York, NY, USA, 10001

Website

https://www.macysinc.com

Founded in 1858 and based in New York City, Macy's operates about 550 stores under the Macy's nameplate, nearly 60 stores under the Bloomingdale's (full-price and outlet) and Bloomie's nameplates, and 158 freestanding Bluemercury specialty beauty stores. Macy's also operates e-commerce sites and licenses two Bloomingdale's stores in the United Arab Emirates and Kuwait. Women's apparel, accessories, shoes, cosmetics, and fragrances composed 61% of Macy's 2022 sales.

Executives

Adrian V Mitchell	officer: Chief Financial Officer	C/O MACY'S, INC., 151 WEST 34TH STREET, NEW YORK NY 10001
Paul Griscom	officer: Interim Principal Acctg. Offr.	C/O MACY'S, INC., 145 PROGRESS PLACE, SPRINGDALE OH 45246
Danielle L. Kirgan	officer: Chief Human Resources Officer	C/O MACY'S, INC., 151 WEST 34TH STREET, NEW YORK NY 10001
Garcia C Elisa D	officer: Chief Legal Officer	151 WEST 34TH STREET, NEW YORK NY 10001
Jeffrey Gennette	officer: Chief Merchandising Officer	C/O MACY'S, INC., 151 WEST 34TH STREET, NEW YORK NY 10001
Antony Spring	officer: Chairman & CEO, Bloomingdale's	C/O MACY'S, INC., 7 WEST SEVENTH STREET, CINCINNATI OH 45202
Naveen K. Chopra	director	C/O 2160 GOLD STREET, SAN JOSE CA 95002
Emilie Arel	director	C/O CASPER SLEEP INC., 175 GREENWICH ST., THREE WORLD TRADE CENTER, FLOOR 39, NEW YORK NY 10007
Jill Granoff	director	LIZ CLAIBORNE, INC., 1441 BROADWAY, NEW YORK NY 10018
Marie A Chandoha	director	C/O THE CHARLES SCHWAB CORPORATION, 211 MAIN STREET, SAN FRANCISCO CA 94105
Ashley Buchanan	director	C/O THE MICHAELS COMPANIES, INC., 8000 BENT BRANCH DRIVE, IRVING TX 75063
Tracey Zhen	director	C/O MACY'S, INC., 145 PROGRESS PLACE, SPRINGDALE OH 45246
John T. Harper	officer: Chief Operations Officer	C/O MACY'S, INC., 151 WEST 34TH STREET, NEW YORK NY 10001
Paul C Varga	director	850 DIXIE HIGHWAY, LOUISVILLE KY 40210
Felicia Williams	officer: EVP,Controller/Enterprise Risk	C/O MACY'S, INC., 151 WEST 34TH STREET, NEW YORK NY 10001