Macy's (M -2.68%) announced fiscal 2022 first-quarter earnings before the markets opened on Thursday, May 26. The retailer continued to thrive as management has skillfully handled the coronavirus pandemic. 

Sales were as expected, but profits outperformed as it sold more merchandise at a full price, and a more significant percentage of shoppers chose to go in-store versus online in Q1.

Let's look closer at the Q1 results that had the stock up 19% on the announcement day.

A person shopping in a department store.

Image source: Getty Images.

Earnings are soaring for Macy's 

In its fiscal first quarter, which ended April 30, Macy's reported net sales of $5.35 billion. That was up from $4.7 billion during the same quarter last year. The increase was impressive considering consumers were in a healthier financial position last year. Inflation had not reared its ugly head yet, and folks were flush with cash after several rounds of government stimulus checks.

Management has skillfully dealt with the challenges presented by the coronavirus pandemic. One of these, which has plagued retailers of all types, is supply chain shortages. Thankfully for shareholders, supply shortages have not materially hurt Macy's. On the contrary, because the industry has seen shortages, Macy's capitalized on the decreased competitive pressure to sell products at higher margins. The gross profit margin in the first quarter increased by 100 basis points to 39.6%.

Said Jeff Gennette, chairman and chief executive officer of Macy's:

We delivered strong earnings, beating our estimates, and sales that were in line with our expectations. While macroeconomic pressures on consumer spending increased during the quarter, our customers continued to shop. We saw a notable shift back to occasion-based apparel and in-store shopping, as well as continued strength in sales of luxury goods. Our omnichannel ecosystem, which spans the value spectrum, has supported our ability to flex our wide assortment of categories, products, and brands to capture consumer demand despite the volatile environment.

Indeed, diluted earnings per share (EPS) were $1.08 in the first quarter that ended in April. That was up from $0.39 in the same quarter in the prior year. Rising gross profit margins and disciplined expense management have contributed to soaring earnings.

Management expects the momentum to continue for the rest of 2022 and raised the profit outlook for the year. The company now expects EPS between $4.53 and $4.95 for 2022. That was up from the previous estimate of between $4.13 and $4.52. It's no surprise that the stock was up 19% on the announcement day.

Is it too late to buy Macy's stock? 

Despite soaring after Q1 earnings, Macy's stock is still not expensive. Considering its price-to-earnings ratio, as seen in the chart, Macy's is selling at nearly the lowest in the previous decade. 

M PE Ratio Chart

M PE Ratio data by YCharts

Similarly, measuring by its price-to-free cash flow reiterates that Macy's is arguably as cheap as it's been in the last decade. Investors can take comfort knowing it's not too late to buy Macy's stock. 

M Price to Free Cash Flow Chart

M Price to Free Cash Flow data by YCharts