Critical Contrast: Macy’s (NYSE:M) & LY (OTCMKTS:YAHOY)

LY (OTCMKTS:YAHOY) and Macy’s (NYSE:M) are both consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, earnings, risk, institutional ownership and profitability.

Valuation and Earnings

This table compares LY and Macy’s”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LY	$13.53 billion	1.59	$1.28 billion	$0.39	15.97
Macy’s	$22.62 billion	0.26	$642.00 million	$2.73	8.34

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

Dividends

LY pays an annual dividend of $0.10 per share and has a dividend yield of 1.6%. Macy’s pays an annual dividend of $0.77 per share and has a dividend yield of 3.4%. LY pays out 25.6% of its earnings in the form of a dividend. Macy’s pays out 28.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Macy’s has raised its dividend for 4 consecutive years. Macy’s is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

LY has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500. Comparatively, Macy’s has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500.

Institutional and Insider Ownership

87.4% of Macy’s shares are owned by institutional investors. 1.1% of Macy’s shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares LY and Macy’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LY	6.24%	5.49%	1.80%
Macy’s	3.29%	13.21%	3.83%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for LY and Macy’s, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LY	0	2	0	0	2.00
Macy’s	2	9	2	0	2.00

Macy’s has a consensus target price of $22.78, indicating a potential upside of 0.09%. Given Macy’s’ higher possible upside, analysts clearly believe Macy’s is more favorable than LY.

Summary

Macy’s beats LY on 11 of the 16 factors compared between the two stocks.

About LY

LY Corporation engages in the online advertising and e-commerce businesses in Japan. The company provides LINE, a communication app; and Yahoo! JAPAN, an internet service that offers search, news, weather, shopping, auction, and other services. It also offers reuse, membership, and payment-related services. The company was formerly known as Z Holdings Corporation and changed its name to LY Corporation in October 2023. LY Corporation was founded in 1996 and is headquartered in Chiyoda, Japan. LY Corporation operates as a subsidiary of A Holdings Corporation.

About Macy’s

Macy’s, Inc. engages in the retail of apparel, accessories, cosmetics, home furnishings, and other consumer goods. The firm’s brands include Macy’s, Bloomingdale’s, and Bluemercury. It offers men’s, women’s, and children’s apparel, women’s accessories, intimate apparel, shoes, cosmetics, fragrances, as well as home and miscellaneous products. The company was founded by Rowland H. Macy in 1858 and is headquartered in New York, NY.