Nordstrom Inc (JWN, Financial) has recently experienced a notable uptick in its stock performance, with a market capitalization now standing at $2.59 billion. The current price of the stock is $15.95, reflecting a 2.11% gain over the past week and a more significant 10.19% gain over the past three months. According to GuruFocus's valuation metrics, the stock is currently modestly undervalued with a GF Value of $22.4, compared to a past GF Value of $23.25. This suggests a shift from a previous assessment of a possible value trap to a more favorable investment opportunity.
Introducing Nordstrom Inc
Nordstrom Inc, a stalwart in the retail - cyclical industry, operates a chain of about 93 department stores and approximately 260 off-price Nordstrom Rack stores. The company's e-commerce platforms complement its physical presence, along with two clearance stores and seven Local locations. Nordstrom's primary merchandise categories include women's apparel, shoes, men's apparel, and women's accessories. With a rich history dating back to a single shoe store in Seattle in 1901, Nordstrom remains partially owned and managed by the founding family. 
Assessing Nordstrom's Profitability
Nordstrom's Profitability Rank stands at a solid 6/10, indicating a competitive position within the industry. The company's operating margin is 3.47%, which is better than 51.22% of companies in the retail sector. Its return on equity (ROE) is an impressive 17.88%, surpassing 79.21% of its peers. Additionally, Nordstrom's return on assets (ROA) and return on invested capital (ROIC) are 1.32% and 7.28% respectively, both metrics outperforming the majority of competitors. With nine years of profitability over the past decade, Nordstrom demonstrates a consistent ability to generate earnings.
Understanding Nordstrom's Growth Trajectory
The Growth Rank for Nordstrom is currently at 1/10, reflecting challenges in the company's recent growth metrics. The 3-year revenue growth rate per share stands at -1.20%, and the 5-year rate at -0.70%, indicating a contraction in revenue. The estimated total revenue growth rate for the next 3 to 5 years is also negative at -1.31%. However, the future 3 to 5-year estimate for EPS growth rate is a robust 22.00%, suggesting potential for earnings expansion despite revenue headwinds.
Notable Shareholders in Nordstrom
Among the notable shareholders of Nordstrom, Chuck Royce (Trades, Portfolio) holds 510,121 shares, representing a 0.32% share percentage. Mark Hillman (Trades, Portfolio) follows with 300,255 shares, or 0.19% of the company, and Lee Ainslie (Trades, Portfolio) owns 106,530 shares, equating to 0.07%. These investors' commitments to Nordstrom reflect a belief in the company's value proposition and future potential.
Competitive Landscape
In comparison to its competitors, Nordstrom's market cap is closely aligned with Kohl's Corp (KSS, Financial) at $2.65 billion and is smaller than Macy's Inc (M, Financial) with a market cap of $4.66 billion. On the other end of the spectrum, Vestiage Inc (VEST, Financial) has a significantly lower market cap of $1.167 million, highlighting the varied scale of companies within the retail industry.
Conclusion: Nordstrom's Market Position and Outlook
In summary, Nordstrom Inc's recent stock price rally can be attributed to its modest undervaluation relative to the GF Value and its solid profitability metrics. While the company faces growth challenges, the positive outlook on future earnings suggests potential for recovery and growth. Investors should consider Nordstrom's competitive position within the retail industry and its ability to navigate cyclical trends when evaluating its stock for their portfolios.
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.
