Attention Investors: Nordstrom's (JWN) stock at a new low
Last week Nordstrom, Inc. (NYSE:JWN) slashed its forecast for Q3 profit, citing disappointing sales and bulging inventory. The stock fell hard and is now at a new 52-week low, trading around $38 a share from a 52-week high of $59.70. Wall Street is overreacting, this is Nordstrom, not the Gap (GPS) or Coldwater Creek (CWTR) and investors waiting to jump in, now is the time.
Nordstrom plans to earn 50 to 53 cents a share for Q3, down from their previous projection for earnings of 61 to 64 cents. The knife in the back for Nordstrom is their reduced forecast for third-quarter comparable sales to a gain only 2 to 4%. The Seattle based retailer's previous forecast was for an increase of 4 to 5%. The sky is not falling America, this is Nordstrom, the Cadillac of the Apparel Industry.
I don't care if Nordstrom's comparable-store sales only went up 3.2% in the five weeks that ended Oct. 6, less than the 4.9% analysts estimated. Big Deal! Nordstrom said it was taking “additional markdowns.” The company had increased inventories as part of its strategy to offer more designer goods at about a quarter of its 100 stores.
Nordstrom president Blake Nordstrom said, “We are taking immediate action to bring inventory levels in line, which will negatively impact merchandise margins for the remainder of the year.” The guy is all over it and when Q3 earnings are released on Nov. 19th, I'm sure Nordstrom's stock will do just fine.
On Oct 12th, Lehman Brothers reduced Nordstrom's target price from $58 to $55. Wow, $3, better sell all shares now. Then on Oct 18th Goldman Sachs downgraded shares of Nordstrom Inc. to "Neutral" from "Conviction List Buy," and said unseasonably warm weather and a build up of inventory have changed the department store operator's near-term prospects. They went on to say "we believe a non-accommodating macro backdrop and continued warm weather could create further downside over the next several quarters as executives play catch-up."
So everyone is against Nordstrom and that's great for investors that haven't made a position yet in this stock, so my vote is to let shares fall even lower. In the past year after climbing to $59 the stock has been on a bumpy ride, and over the past 52-week the stock is down 20% with the biggest downfall occurring in the last two weeks:
Nordstrom's P/E is at 14.2, compare that to Macy's (M) 18.73, The Gap's (GPS) 19.42, Abercrombie & Fitch's (ANF) 15.96 and you can start to appreciate the situation at hand.
Just look at their numbers over the last two years courtesy of Google Finance:
(In millions of USD)
|Total Current Assets||3,507.84||2,742.19||2,874.16|
|Total Current Liabilities||1,560.92||1,433.14||1,623.31|
It's a work of art. People love to shop at Nordstrom, they treat their customers like royalty. Don't sleep on their stock for long.
Epinions.com reiterates that opinion, read the 38 reviews:
Article by Frank Lara Jr.
Contributor at TheStockMasters.com
Disclaimer: The Author does not hold any positions or shares in the securities mentioned in this publication.
5 Second Advertisement by theStockMasters - Just read it, we're cheap.
Our Original newsletter that has enlightened our subscribers for over a year. It contains What to Buy, What to Sell, and Market Commentary. We have a 17.5% return since October 2006 and the average wait for a return is only 3.61 months and we have the track record to prove it (click here to view Master Picks track record). We've had great feedback, and in turn have already created a unique following of thousands of Stockmasters. Our asking price is only $45 for a 12 month subscription.
Best of the Blogs
Scanning and identifying the best blog entries every hour
- New Long | iBankCoin.com
- "You've Got Jail" | ZeroHedge
- The Latest Government Trust Fund To Go Bankrupt | ZeroHedge
- Bubble Finance And A Tale Of Two Spheres | ZeroHedge
- Saudi Announcement Met With Disdain | iBankCoin.com
- Spinning Higher, As Scheduled | iBankCoin.com
- 5 Things To Ponder: Mentally Conflicted | ZeroHedge
The most relevant financial news and articles from the Internets
- The Best Business Schools of 2011 | BusinessWeek
- Baltimore hasn't seen this many killings in 4 decades | Business Insider
- Why Jon Stewart is basically the best boss in America | Business Insider
- Breathtaking photos show how... | Business Insider
- Watch a swimming pool turn into a skate park in this two minute time-lapse | Business Insider
- Facebook is dominating Google, Yahoo, and Amazon in this one niche area (FB, GOOG... | Business Insider
- 25 Ways to Make LinkedIn Work for You | BusinessWeek