Investing

Earnings Previews: Nordstrom, Petco, Toll Brothers, Urban Outfitters

The three major U.S. equity indexes closed lower Friday. The Dow Jones industrials dropped 0.86%, the S&P 500 lost 1.29% and the Nasdaq tumbled by 2.01%. Ten of 11 sectors ended the day with losses, led by consumer cyclicals and financials (down 2.1% and 2.0%, respectively). For the week, the Nasdaq was down 2.6%, the S&P 500 down 1.2% and the Dow slipped by just 0.2%.

Looking ahead, on Thursday we shall get the second reading on second-quarter gross domestic product, while Friday brings the personal income and spending report. Thursday also marks the beginning of the Federal Reserve’s Jackson Hole retreat, the highlight of which is Chair Jerome Powell’s press conference Friday morning. In the meantime, we can do little but wonder if equities’ gains of the past few weeks will evaporate. All three major indexes were down by about 1% or more in premarket trading Monday.

There were no notable earnings releases after markets closed Friday or before they opened on Monday. Two companies are set to report quarterly results after markets close on Monday: Palo Alto Networks and Zoom Video. First thing Tuesday morning, JD.com, KE Holdings, Macy’s and Medtronic are expected to release quarterly results.

The following four companies will post quarterly results late Tuesday or early Wednesday.

Nordstrom

Shares of department store operator Nordstrom Inc. (NYSE: JWN) have lost about 29% of their value over the past 12 months. Year to date, however, the shares have added about 6.9%, and over the past six months, shares have gained almost 12%. The stock’s 52-week high rolls off later this week, with shares trading nearly 30% above the 52-week low. In late May, the company announced a $500 million share buyback program and a relatively easy comparison with prior year results is also working in the company’s favor. Nordstrom reports after markets close Tuesday.

Analysts are not convinced, however, that Nordstrom is a solid play. Of 22 brokerages covering the stock, 14 have Hold ratings while only three rate the shares at Buy or Strong Buy. At a recent price of around $24.20 a share, the stock trades slightly above its median price target of $24.00. At the high price target of $43.50, the upside potential is nearly 80%.


For the second quarter of fiscal 2023 that ended in July, revenue is forecast at $3.97 billion, which would be up 11.3% sequentially and by 8.5% year over year. Analysts have forecast earnings per share (EPS) of $0.80 for the quarter, compared to a loss of $0.06 per share in the prior quarter and EPS of $0.49 in the year-ago quarter. For the full 2023 fiscal year ending in January, current estimates call for EPS of $3.12, up 107.7%, on sales of $15.82 billion, up almost 7%.

Nordstrom stock trades at 7.8 times expected 2023 EPS, 7.5 times estimated 2024 earnings of $3.21 and 7.6 times estimated 2025 earnings of $3.18 per share. The stock’s 52-week trading range is $18.65 to $38.14. The company pays an annual dividend of $0.76 (yield of 3.1%). Total shareholder return for the past year was negative 27.7%.

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