Shares of Macy’s (M) are up 20% so far to start the week as the company is reportedly reviewing a $5.8 billion buyout offer. Shares have now surged more than 86% in the past month.

A source close to the matter says the offer comes from two investors, real estate investor Arkhouse Management and Asset Manager Brigade Capital Management. The $5.8 billion buyout puts the company’s stock at about a $21/share valuation, just above its current price of $20.69/share.

The company has been pondering the offer since it came in on December 1st according to the source. Considering the company’s struggles over the past few years, it’s certainly a compelling offer. M hit its peak more than 8 years ago when shares reached nearly $71 a share. 

Since then, the stock has bounced around in the $20-30/share range, with the COVID-19 pandemic sending the stock as high as $34.71 before it fell back to reality with the easing of restrictions and subsequent economic falloff.

Part of what makes Macy’s such an attractive asset, and the reason Arkhouse Management is interested in the company, is its real estate portfolio. Its Herald Square location in New York City is one of its most valuable pieces. In fact, it has been valued as high as $3-4 billion by various money managers over the past decade. 

That being said, Macy’s is currently in the midst of its holiday season, and likely won’t disrupt its focus until 2024 in regards to this buyout offer. There are a lot of moving pieces within the company right now, with a new CEO set to take over in just a few months.

So, where does that leave investors – or those interested in trading M to ride this hype? We’ve analyzed M through the VectorVest stock forecasting software and uncovered 3 things you need to know before you do anything else.

Despite Poor Upside Potential and Safety, M Has Excellent Timing

The VectorVest system simplifies your trading strategy by telling you what to buy, when to buy it, and when to sell it. You’re given all the insights you need to make clear, calculated decisions in 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT).

Each rating sits on a scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy, saving you time and stress. It gets better though.

Because based on the overall VST rating for any given stock at any given time, you’re offered a clear buy, sell, or hold recommendation. As for M, here’s what you need to know:

  • Poor Upside Potential: The RV rating is a comparison between a stock’s long-term price appreciation potential (forecasted 3 years out) and AAA corporate bond rates & risk. It offers far superior insight than a simple comparison of price to value alone. M has a poor RV rating of 0.73 right now. Even though the buyout offer puts the stock’s valuation at $21/share, VectorVest values M at just $13.09/share.
  • Poor Safety: The RS rating is an indicator of risk. It’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. M has a poor RS rating of 0.80 right now.
  • Excellent Timing: The stock is surging, and the RT rating of 1.99 has essentially tipped out the scale. This rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s taken day over day, week over week, quarter over quarter, and year over year.

The overall VST rating of 1.37 is very good for M - and it’s enough to earn the stock a BUY recommendation in the VectorVest system. That being said, we encourage you to learn more by getting a free stock analysis at VectorVest today!

Want These Types of Insights at Your Fingertips so You Can Win More Trades?

Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. M is up 20% today and 86% in the past month as the company ponders an enticing buyout offer. The stock currently has poor upside potential and safety, but it does have excellent timing.

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