Fundamentals Say Watch Nordstrom Stock Ahead of Earnings

Nordstrom stock has more than doubled in less than a year

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Nordstrom, Inc. (NYSE:JWN) is an American luxury fashion retailer. JWN’s department stores offer clothing, footwear, handbags, jewelry, accessories, cosmetics, and fragrances. Some stores feature home furnishings and wedding departments, and several have in-house cafes, restaurants, and espresso bars. Nordstrom operates more than 350 locations under the names Nordstrom, Nordstrom Local, and Nordstrom Rack. This afternoon JWN was last seen up 2.4% at $33.28. 

In recent news, Nordstrom announced Farrell Redwine as its new Chief Human Resources Officer on July 20. Farrell joined Nordstrom in 2016 and has held various leadership roles throughout her tenure. Prior to Nordstrom, she held global HR leadership roles at several other large corporations, including ExxonMobil and Time Inc. JWN is also expected to release its quarterly earnings report on Aug. 23.

Over the past 12 months, Nordstrom has beat earnings expectations on two of its last four quarterly earnings reports. For Q3 of fiscal 2020, JWN missed analysts’ estimates by a margin of $0.14 and reported an EPS of -$1.62. For Q4 of fiscal 2020, Nordstrom's EPS increased to $0.34 and beat expectations by a margin of $0.40. For Q1 of fiscal 2021, JWN posted a decrease in earnings, dropping to $0.21 per share but still beating estimates by a margin of $0.07. Most recently, for Q2 of fiscal 2021, Nordstrom reported an EPS of -$0.64 and missed expectations by a margin of $0.07. Analysts expect that JWN will turn a corner when reporting on its fiscal Q3, making it into positive territory with a projected EPS of $0.27.

Nordstrom stock has increased by about 137% in price year-over-year and JWN is up nearly 182% since bottoming at a multi-year low of $11.72 last Fall. Shares of JWN have grown by 7% year-to-date. However, Nordstrom stock is down by almost 30% since reaching its nearly two-year high of $46.45 in mid-March.

Fundamentally, JWN has many points of concern, with perhaps the biggest being its valuation. Even after losing about a third of its value, Nordstrom stock still has a sky-high forward price-earnings ratio of 27.62.

The fashion retailer has struggled to make significant progress in its recovery after suffering massive top- and bottom-line losses as a result of the COVID-19 pandemic. Nordstrom also carries a balance sheet with $5.46 billion in debt and only $377 million in cash. This balance sheet provides JWN very little hope for growth in the long-term as well. In general, Nordstrom stock may have already seen its peak and could easily continue its bear run.


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