What Should Investors Know About Nordstrom (JWN) Stock?

Nordstrom logged a 2.43% change Friday, and is now trading at a price of $19.8 per share. The S&P 500 index moved 1.6% and the Nasdaq posted a 2.07% change.

Nordstrom shares moved -15.56% over the last 52 weeks, with a high of $28.8 and a low of $15.53. During this time, the stock lagged the S&P 500 index by -11.86%. As of January 2022, the company's 50-day average price is $19.04. Nordstrom, Inc., a fashion retailer, offers clothing, shoes, beauty, accessories, and household items for women, men, young adults, and children. The mid-cap Consumer Discretionary company is based in Seattle, WA. Nordstrom has returned a 4.0% dividend yield over the last 12 months.

Higher Operating Margins Than the 4.35% Industry Average But Worrisome Debt Levels and Declining Earnings:

2019-02-02 2020-02-01 2021-01-30 2022-01-29
Revenue (MM) $15,860 $15,524 $10,715 $14,789
Revenue Growth n/a -2.12% -30.98% 38.02%
Gross Margins 33.58% 33.5% 59.06% 65.91%
Gross Margins Growth n/a -0.24% 76.3% 11.6%
Operating Margins 2.81% 37.83% 18.11% 31.83%
Operating Margins Growth n/a 1246.26% -52.13% 75.76%
Earnings Per Share $3.58 $3.19 -$4.37 $1.12
EPS Growth n/a -10.89% -236.99% 125.63%
Diluted Shares (MM) 158 156 158 159
Free Cash Flow (MM) $642 $301 -$733 $199
FCF Growth n/a -53.12% -343.52% 127.15%
Capital Expenditures (MM) $654 $935 $385 $506
LT Debt to Equity 3.08 2.73 10.72 4.91

Nordstrom Is Overvalued:

Compared to the Consumer Discretionary sector's average of 22.33, Nordstrom has a trailing twelve month P/E ratio of 9.47 and, according to its EPS guidance of 1.94, an expected P/E ratio of 10.21.

Nordstrom's P/B ratio is 4.644 compared to its sector average of 3.12. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 75.22% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 1.23 * 4.616) = $11.3

16 analysts are following Nordstrom and have set target prices ranging from $12.0 to $22.0 per share. On average, they have given the company a rating of hold. At the current price of $19.8, JWN is trading 7.03% away from its average analyst target price of $18.5 per share, implying an analyst consensus of little upside potential for the stock.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.