Did Macy’s and Kohl’s Set the Earnings Bar Too High for Nordstrom?

August 11, 2016 by Chris Lange

Nordstrom Inc. (NYSE: JWN) is scheduled to release its fiscal-second quarter financial results after the markets close on Thursday. Ahead of this report, the stock is up handily, most likely as the result of some incredible earnings released earlier in the day from both Macy’s Inc. (NYSE: M) and Kohl’s Corp. (NYSE: KSS), both up over 10%. Can Nordstrom reach the bar set by these other two retail giants with its earnings report?

The Thomson Reuters consensus estimates call for $0.56 in earnings per share (EPS) on $3.68 billion in revenue for Nordstrom’s most recent quarter. In the same period of last year, it posted EPS of $0.93 and $3.7 billion in revenue.

Following its May earnings report, Nordstrom fell about 19% the following week, along with practically every other major retailer that reported. The updated guidance for the full year did not help either.

However, with expectations so low before reporting earnings. it seems that there is nowhere to go but up. At least this was the case for Macy’s and Kohl’s.

Back in February, Nordstrom raised its dividend by 10%. The company’s strong square footage growth profile and best in-class e-commerce business should drive solid dividend growth going forward.

Ahead of the earnings report, a few analysts weighed in on Nordstrom:

  • Piper Jaffray reiterated an Overweight rating with a $56 price target.
  • Goldman Sachs reiterated a Neutral rating with a $39 price target.
  • Maxim initiated coverage with a Buy rating and a $50 price target.
  • Argus reiterated a Hold rating.

Excluding Thursday’s move, Nordstrom has underperformed the broad markets, with the stock down about 10% year to date. Over the past 52 weeks, the stock is down 36%.

Shares of Nordstrom were trading up 7% at $47.35 on Thursday, with a consensus analyst price target of $41.40 and a 52-week trading range of $35.01 to $79.98.

Macy’s shares were last seen up 13% at $38.46. The consensus price target is $38.61, and the 52-week range is $29.94 to $65.11.

Kohl’s was up nearly 14% to $43.35, within a 52-week range of $33.87 to $57.66. The consensus price target is $41.25.

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