Macy's Volume surge

Macy's volume surged on friday, both stock and option volume surged greatly on the speculation of a takeover target. The stock volume was more than 3 times the average daily volume over 3 months. The open interest in the options also more than doubled on friday. The result was that the stock jumped by $2.56 to close at $41.43
Revenue has been on the upswing since 2005, when it completed the acquisition of The May Department Stores. Two year revenue growth has been 30.8% and five year revenue growth is 11.5%. So you can see the recent acceleration in the revenue growth. However, the net margin declined to 3.7% in 2007 compared to 6.1% in 2006. The Net Income also declined in 2007 compared to 2006. This makes one think that some inefficiencies might have creeped into their operation. Possibly, as a result of this the stock price has been declining since April. The lower stock price can make Macy's an attractive take over target.

As the chart clearly shows that the current operation may not merit a buy, but a potential takeover speculation has raised some interests.