Nordstrom Inc (JWN, Financial), a stalwart in the retail - cyclical industry, has recently seen a notable uptick in its stock performance. With a market capitalization of $2.77 billion, the company's shares are currently trading at $17.08. Over the past week, Nordstrom's stock price has experienced a 0.99% gain, and looking at the past three months, the gain extends to an impressive 13.11%. This positive trajectory in stock price is particularly interesting when considering the company's valuation metrics. The GF Value of Nordstrom is currently at $22.4, down from a past GF Value of $23.25. Despite this slight decrease, Nordstrom's current stock price suggests that it is modestly undervalued, a shift from the previous assessment of being a possible value trap where investors were advised to think twice.
Understanding Nordstrom's Business
Nordstrom Inc (JWN, Financial) is a prominent name in the fashion retail sector, with a history dating back to a single shoe store opened in Seattle in 1901. Today, the company boasts around 93 department stores, approximately 260 off-price Nordstrom Rack stores, two clearance stores, and seven Local locations, alongside robust full- and off-price e-commerce platforms. The company's primary merchandise categories include women's apparel, shoes, men's apparel, and women's accessories, which together form the core of Nordstrom's sales. The Nordstrom family continues to play a significant role in the company's management, maintaining a connection to its rich heritage. 
Assessing Nordstrom's Profitability
Nordstrom's financial health can be partly gauged by its Profitability Rank, which currently stands at 6/10. This rank is a testament to the company's ability to generate profits and sustain its business model. The Operating Margin of 3.47% is better than 51.26% of the companies in the industry, indicating efficient management of its operations. Furthermore, Nordstrom's Return on Equity (ROE) is an impressive 17.88%, surpassing 79.12% of its peers. The Return on Assets (ROA) at 1.32% and Return on Invested Capital (ROIC) at 7.28% also reflect the company's ability to utilize its assets and capital to generate earnings. These figures are particularly noteworthy given that Nordstrom has maintained profitability for nine out of the past ten years, outperforming 71.22% of the companies in the industry.
Nordstrom's Growth Trajectory
Despite the positive aspects of Nordstrom's profitability, the company's Growth Rank presents a different picture, standing at a low 1/10. The 3-Year Revenue Growth Rate per Share has declined by 1.20%, and the 5-Year Revenue Growth Rate per Share has seen a decrease of 0.70%. These figures suggest that Nordstrom has been facing challenges in expanding its revenue streams. The estimated Total Revenue Growth Rate for the next three to five years is also negative at -1.31%. However, there is a silver lining with the projected EPS Growth Rate for the same period, which is expected to be 22.00%, indicating potential for future earnings expansion.
Key Shareholders in Nordstrom
The investment landscape of Nordstrom includes notable shareholders such as Chuck Royce (Trades, Portfolio), who holds 510,121 shares, Mark Hillman (Trades, Portfolio) with 300,255 shares, and Lee Ainslie (Trades, Portfolio) who owns 106,530 shares. These investors have shown confidence in the company's stock, holding respective share percentages of 0.32%, 0.19%, and 0.07%. Their stakes in Nordstrom underscore the interest from the investment community and may influence the company's strategic decisions.
Competitive Landscape
In the competitive retail market, Nordstrom faces stiff competition from companies like Kohl's Corp (KSS, Financial) with a market cap of $2.87 billion, Macy's Inc (M, Financial) valued at $5.56 billion, and Vestiage Inc (VEST, Financial) with a significantly smaller market cap of $1.167 million. These competitors are closely matched in terms of market capitalization, particularly Kohl's, which is slightly ahead of Nordstrom. The competitive dynamics within this sector are crucial for Nordstrom's strategic positioning and market share.
Conclusion: Nordstrom's Market Position and Outlook
In summary, Nordstrom Inc's recent stock performance has been encouraging, with a 13.11% gain over the past three months, signaling investor optimism. The company's current valuation suggests it is modestly undervalued, presenting a potential opportunity for value investors. While Nordstrom's profitability metrics are strong, its growth prospects appear mixed, with a notable projected increase in EPS over the next few years. The involvement of significant shareholders and the competitive landscape will continue to play a role in shaping Nordstrom's future. As the retail industry evolves, Nordstrom's ability to adapt and innovate will be critical in maintaining its market position and driving long-term shareholder value.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
