Last Friday, we learned that retail sales for the month of October rebounded and increased by 0.3%. That 0.3% is great news as we head into holiday shopping season, especially for big retailers like Nordstrom (JWN).
With the retail industry bouncing back, is now a good time to buy Nordstrom stock?
Nordstrom – Company Profile
With over 62,000 full-time employees and operations across 38 states, Nordstrom represents one of the largest upscale department store chains in the country. Currently, Nordstrom has 118 locations as well as 167 Nordstrom Rack clearance stores and two Jeffrey boutiques.
Nordstrom – Earnings Rundown
Nordstrom stock rose to a new high on Friday after its robust top- and bottom-line growth for the third quarter. Compared with Q3 2013, profit rose 4% to $142 million, or 73 cents per share. Nordstrom beat analysts’ estimates of 71 cents per share by 2.8%. Over the same period, sales rose 9% to $3.14 billion, also topping the $3.10 billion consensus estimate by a hair.
Looking ahead to fiscal 2014, however, Nordstrom lowered its earnings guidance to between $3.70 and $3.75; the previous guidance had been $3.80 to $3.90 per share. Nordstrom’s acquisition of men’s wear website, Trunk Club, has cost JWN $357 million. So, Trunk Club is what caused the reduced guidance for Nordstrom.
At the same time, Nordstrom now expects 7.5% same-store sales growth, up from its previous guidance of 6.5% same-store growth.
Nordstrom – Current Ratings
Nordstrom has rebounded considerably this year, starting the year off in “sell” territory and improving to a “buy” thanks to solid institutional buying pressure. Nordstrom earns a “B” for its Quantitative Grade.
On the fundamentals side, Nordstrom has room for improvement. Nordstrom’s strength is in its return on equity, which earns an impressive “A.” Sales growth, operating margin growth, earnings growth, earnings momentum, analyst earnings revisions, and cash flow all earn mediocre “C” grades. Earnings surprises is a metric that needs the most improvement, earning a “D.” Overall, Nordstrom receives a “C” for its Fundamental Grade
As of this posting, Nov. 17, I consider Nordstrom a “B-rated Buy.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
