Macy's shares have jumped 70 percent in the last year. (Andrew Burton / April 30, 2012)
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Shares of retailer Macy's Inc. are undervalued and could rise another 20 percent after jumping 70 percent in the last year, Barron's said on Sunday.
The business weekly quoted respected investor Robert Olstein as saying Chief Executive Officer
Terry Lundgren has turned Macy's around by slashing bureaucracy and implementing new sales and distribution systems to respond to changes in customer taste.
"We still believe Lundgren is one of the best managers in retail and that shares are undervalued," Olstein, who runs a money management firm outside New York, was quoted as saying by Barron's.
Olstein said he believed Macy's stock was worth $49 per share, or 20 percent above its recent level. It closed on Friday at $41.18.
The weekly noted Macy's price/earnings multiple, based on expected 12-month earnings, stands at 14.1, compared with a P/E of 11.7 a year ago.
It said Lundgren was projecting a 10 percent-plus gain in earnings this year and Macy's "has gotten its house in order" following the 2005 acquisition of May Department Stores, which along with the recession, helped saddle the company with $9 billion in debt.
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