Analysis of Greg Abel's First Quarter as CEO of Berkshire Hathaway
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 05 2026
0mins
Source: Fool
- Reason for Amazon Sale: Berkshire Hathaway held approximately 2.3 million shares of Amazon in Q4, and despite Amazon's strong performance in e-commerce and cloud computing, its negligible portion of Berkshire's $263 billion portfolio made the sale unsurprising, reflecting CEO Abel's reassessment of the investment strategy.
- Investment in Macy's: Berkshire Hathaway purchased about 3 million shares of Macy's, which has faced significant challenges, yet the company's Q1 2026 net sales increased by 1.8% year-over-year, indicating potential recovery that may have caught Abel's attention.
- Attractive Valuation of Macy's: Macy's forward P/E ratio stands at 10.2, significantly lower than the consumer discretionary average of 26.2, suggesting it may be undervalued, and Abel's investment could be based on optimism regarding the value of its real estate holdings.
- Financial Performance Exceeds Expectations: Macy's adjusted EPS reached $0.13 in Q1 2026, an 18% increase year-over-year, surpassing Wall Street estimates, and the company raised its full-year guidance, indicating a positive operational trajectory that may bolster Berkshire's investment confidence.
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Analyst Views on M
Wall Street analysts forecast M stock price to fall
12 Analyst Rating
2 Buy
9 Hold
1 Sell
Hold
Current: 23.890
Low
8.00
Averages
21.33
High
27.00
Current: 23.890
Low
8.00
Averages
21.33
High
27.00
About M
Macy's, Inc. is an omnichannel retail company. The Company operates stores, websites and mobile applications under three brands, Macy's, Bloomingdale's and Bluemercury, which sell a range of merchandise, including apparel and accessories (men's, women's and kids'), cosmetics, home furnishings and other consumer goods. The Company has stores in 43 states, the District of Columbia, Puerto Rico and Guam. Its operations are conducted through Macy's, Macy's Backstage, Macy's small format, Bloomingdale's, Bloomingdale's The Outlet, Bloomie's, and Bluemercury. In addition, Bloomingdale's in Dubai, United Arab Emirates and Al Zahra, Kuwait are operated under a license agreement with Al Tayer Insignia. The principal private label brands offered by the Company include Alfani, And Now This, Aqua, Bar III, Cerulean 6, Charter Club, Club Room, Epic Threads, first impressions, Giani Bernini, Holiday Lane, Home Design, Hotel Collection, Hudson Park, Ideology, I-N-C, jenni, JM Collection, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Berkshire Hathaway Increases Stake in Macy's Amid Recovery
- Investment Return Potential: Macy's P/E ratio stands at 10, having dropped as low as 7.5 in Q1 2026, indicating the stock is undervalued and attracting Warren Buffett's interest, with expectations that future prices will reflect its intrinsic value.
- Sales Growth Recovery: Macy's achieved its strongest sales growth in four years during Q1 of fiscal 2026, with net sales rising and guidance for the year improved, now projecting comparable sales growth between 0.5% and 1.2%, signaling market recovery.
- Asset Value Advantage: Macy's holds up to $9 billion in real estate assets while its market cap is around $6.3 billion, allowing investors to acquire its asset base at a significant discount, enhancing its investment appeal.
- Stable Dividend Yield: Macy's pays an annual dividend of nearly $0.77 per share, yielding over 3%, and recently raised the payout by 5%, providing investors with returns while waiting for recovery, despite being below pre-pandemic levels.
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Reasons Behind Macy's Undervalued Stock Price
- Attractive P/E Ratio: Macy's P/E ratio stands at 10, having dipped to 7.5 in Q1 2026, indicating its stock is undervalued in the market, which has drawn interest from Buffett despite overall retail sector challenges.
- Sales Growth Recovery: Macy's achieved its strongest sales growth in four years during Q1 of fiscal 2026, with net sales rising and guidance for comparable sales now expected to increase between 0.5% and 1.2%, signaling a revival in company performance.
- Real Estate Asset Value: Macy's real estate holdings are estimated at $9 billion, while its market cap is only $6.7 billion, allowing investors to purchase its asset base at a significant discount, highlighting its potential intrinsic value.
- Dividend Yield Advantage: Macy's pays an annual dividend of nearly $0.77 per share, yielding about 3%, well above the S&P 500 average of 1%, and has recently increased its payout by 5%, indicating the company's ability to sustain and grow dividends, appealing to income-seeking investors.
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Middle East Peace Deal Boosts Consumer Stocks
- Oil Price Impact: The peace deal in the Middle East has driven U.S. crude prices to a three-month low, reducing gas costs for consumers and potentially boosting retail stocks like Home Depot, Target, and Macy's, which is expected to enhance consumer spending and alleviate inflationary pressures.
- Market Rotation Expectations: With easing geopolitical tensions, investors may shift focus to cyclical stocks, particularly in consumer goods and small-cap companies, as strategists from JPMorgan and Morgan Stanley anticipate that cyclical stocks will outperform tech in the second half of the year.
- Consumer Sector Confidence: BCA Research strategists have initiated a
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Macy’s Shares Hit New 52-Week High Amid Turnaround Efforts
- Stock Performance: Macy’s (M) shares continue to rise, hitting a new 52-week high on Friday, putting the stock on track for a fourth consecutive week of gains, indicating a strong short-term recovery momentum for the company.
- Strategic Transformation: Under the leadership of a new CEO, Macy’s has launched a 'Bold New Chapter,' closing hundreds of underperforming stores and upgrading its merchandise to a more luxurious assortment, aimed at enhancing brand image and market competitiveness.
- Investment Appeal: Berkshire Hathaway made a $55 million investment in Macy’s, which has already yielded a 40% return since May 18, reflecting market confidence in Macy’s turnaround efforts.
- Future Outlook: Macy’s projects FY2026 net sales between $21.5 billion and $21.75 billion, while raising its adjusted EPS guidance to $2 to $2.20, indicating an optimistic outlook for future growth.
See More
Macy's Reports Strong Q1 Performance with 85% Stock Surge
- Significant Growth: Macy's reported a 2% revenue increase to $4.9 billion in Q1, with net income soaring 66% to $63 million, demonstrating a recovery after three years of declining earnings and boosting market confidence with two consecutive quarters of growth.
- Successful Strategic Shift: The 'Bold New Chapter' initiative, which involved closing around 150 underperforming stores and focusing on 350 core locations, has successfully met sales and expense targets, driving growth in Bloomingdale's and Blue Mercury, indicating the effectiveness of the strategic adjustments.
- Store Revamp Initiative: Macy's plans to reimagine 200 stores to enhance customer experience, with the revamped locations achieving a 2.4% increase in comparable sales in Q1, surpassing the overall 1.6% growth, showcasing the success of the renovation strategy.
- Optimistic Outlook: Following Q1's success, Macy's raised its full-year sales and earnings guidance, now expecting net sales of $21.5 to $21.75 billion and adjusted earnings per share of $2.00 to $2.20, reflecting strong confidence in future growth.
See More
Macy's Stock Surges as Berkshire Hathaway Invests
- Strong Stock Performance: Macy's stock has surged approximately 85% over the past 12 months, indicating a significant recovery in the retail market and increased investor confidence, particularly following its successful first-quarter earnings report.
- Notable Revenue Growth: The company reported a 2% increase in revenue to $4.9 billion in the first quarter, with same-store sales rising 3%, notably driven by a 10.2% surge in Bloomingdale's sales, which underscores the strong demand for luxury brands and solidifies Macy's market position.
- Successful Strategic Transformation: Macy's 'Bold New Chapter' initiative has effectively improved customer experience by closing 150 underperforming stores and reimagining 200 locations, leading to overall sales growth and setting the stage for enhanced financial performance in the future.
- Upward Earnings Guidance: Macy's has raised its fiscal year net sales guidance to between $21.5 billion and $21.75 billion, reflecting confidence in future performance, while also increasing its adjusted earnings per share target to between $2.00 and $2.20, indicating improved profitability.
See More
Berkshire Hathaway Increases Stake in Macy's Amid Recovery
- Investment Return Potential: Macy's P/E ratio stands at 10, having dropped as low as 7.5 in Q1 2026, indicating the stock is undervalued and attracting Warren Buffett's interest, with expectations that future prices will reflect its intrinsic value.
- Sales Growth Recovery: Macy's achieved its strongest sales growth in four years during Q1 of fiscal 2026, with net sales rising and guidance for the year improved, now projecting comparable sales growth between 0.5% and 1.2%, signaling market recovery.
- Asset Value Advantage: Macy's holds up to $9 billion in real estate assets while its market cap is around $6.3 billion, allowing investors to acquire its asset base at a significant discount, enhancing its investment appeal.
- Stable Dividend Yield: Macy's pays an annual dividend of nearly $0.77 per share, yielding over 3%, and recently raised the payout by 5%, providing investors with returns while waiting for recovery, despite being below pre-pandemic levels.
See More
Reasons Behind Macy's Undervalued Stock Price
- Attractive P/E Ratio: Macy's P/E ratio stands at 10, having dipped to 7.5 in Q1 2026, indicating its stock is undervalued in the market, which has drawn interest from Buffett despite overall retail sector challenges.
- Sales Growth Recovery: Macy's achieved its strongest sales growth in four years during Q1 of fiscal 2026, with net sales rising and guidance for comparable sales now expected to increase between 0.5% and 1.2%, signaling a revival in company performance.
- Real Estate Asset Value: Macy's real estate holdings are estimated at $9 billion, while its market cap is only $6.7 billion, allowing investors to purchase its asset base at a significant discount, highlighting its potential intrinsic value.
- Dividend Yield Advantage: Macy's pays an annual dividend of nearly $0.77 per share, yielding about 3%, well above the S&P 500 average of 1%, and has recently increased its payout by 5%, indicating the company's ability to sustain and grow dividends, appealing to income-seeking investors.
See More
Middle East Peace Deal Boosts Consumer Stocks
- Oil Price Impact: The peace deal in the Middle East has driven U.S. crude prices to a three-month low, reducing gas costs for consumers and potentially boosting retail stocks like Home Depot, Target, and Macy's, which is expected to enhance consumer spending and alleviate inflationary pressures.
- Market Rotation Expectations: With easing geopolitical tensions, investors may shift focus to cyclical stocks, particularly in consumer goods and small-cap companies, as strategists from JPMorgan and Morgan Stanley anticipate that cyclical stocks will outperform tech in the second half of the year.
- Consumer Sector Confidence: BCA Research strategists have initiated a
See More
Macy’s Shares Hit New 52-Week High Amid Turnaround Efforts
- Stock Performance: Macy’s (M) shares continue to rise, hitting a new 52-week high on Friday, putting the stock on track for a fourth consecutive week of gains, indicating a strong short-term recovery momentum for the company.
- Strategic Transformation: Under the leadership of a new CEO, Macy’s has launched a 'Bold New Chapter,' closing hundreds of underperforming stores and upgrading its merchandise to a more luxurious assortment, aimed at enhancing brand image and market competitiveness.
- Investment Appeal: Berkshire Hathaway made a $55 million investment in Macy’s, which has already yielded a 40% return since May 18, reflecting market confidence in Macy’s turnaround efforts.
- Future Outlook: Macy’s projects FY2026 net sales between $21.5 billion and $21.75 billion, while raising its adjusted EPS guidance to $2 to $2.20, indicating an optimistic outlook for future growth.
See More
Macy's Reports Strong Q1 Performance with 85% Stock Surge
- Significant Growth: Macy's reported a 2% revenue increase to $4.9 billion in Q1, with net income soaring 66% to $63 million, demonstrating a recovery after three years of declining earnings and boosting market confidence with two consecutive quarters of growth.
- Successful Strategic Shift: The 'Bold New Chapter' initiative, which involved closing around 150 underperforming stores and focusing on 350 core locations, has successfully met sales and expense targets, driving growth in Bloomingdale's and Blue Mercury, indicating the effectiveness of the strategic adjustments.
- Store Revamp Initiative: Macy's plans to reimagine 200 stores to enhance customer experience, with the revamped locations achieving a 2.4% increase in comparable sales in Q1, surpassing the overall 1.6% growth, showcasing the success of the renovation strategy.
- Optimistic Outlook: Following Q1's success, Macy's raised its full-year sales and earnings guidance, now expecting net sales of $21.5 to $21.75 billion and adjusted earnings per share of $2.00 to $2.20, reflecting strong confidence in future growth.
See More
Macy's Stock Surges as Berkshire Hathaway Invests
- Strong Stock Performance: Macy's stock has surged approximately 85% over the past 12 months, indicating a significant recovery in the retail market and increased investor confidence, particularly following its successful first-quarter earnings report.
- Notable Revenue Growth: The company reported a 2% increase in revenue to $4.9 billion in the first quarter, with same-store sales rising 3%, notably driven by a 10.2% surge in Bloomingdale's sales, which underscores the strong demand for luxury brands and solidifies Macy's market position.
- Successful Strategic Transformation: Macy's 'Bold New Chapter' initiative has effectively improved customer experience by closing 150 underperforming stores and reimagining 200 locations, leading to overall sales growth and setting the stage for enhanced financial performance in the future.
- Upward Earnings Guidance: Macy's has raised its fiscal year net sales guidance to between $21.5 billion and $21.75 billion, reflecting confidence in future performance, while also increasing its adjusted earnings per share target to between $2.00 and $2.20, indicating improved profitability.
See More
