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Macy's, Inc. (M)

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Macy's, Inc. (M) has been taking prudent steps to increase sales, profitability and cash flows. These include integration of operations, consolidation of divisions and customer-centric localization initiatives. To help drive traffic, Macy's continues to focus on price optimization, inventory management and merchandise planning. These help the company to deliver better-than-expected fourth-quarter 2011 results.

The quarterly earnings of $1.70 per share beat the Zacks Consensus Estimate of $1.65, and rose 6.9% from the prior-year quarter. Macy's now expects fiscal 2012 earnings between $3.25 and $3.30 per share. The company hinted that it is seeking to expand both the Macy's and Bloomingdale's brands, as the year present enormous opportunity to enhance market share.

Macy's, which saw 4.6% increase in February comparable-store sales, now expects comps growth of approximately 3.5% for fiscal 2012. We maintain our long-term Outperform recommendation on the stock. Our target price of $42.00, 12.6X 2012 EPS, reflects this view.

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