Yahoo Finance Nordstrom’s 1Q16 Results Drag Its Stock Down
Nordstrom Lowered Fiscal 2016 Outlook after Dismal 1Q16 Results
Impact of 1Q16 results
Nordstrom’s (JWN) stock price fell by 13.4% to $39.16 on May 13 in reaction to weak 1Q16 results and a downward revision to the company’s fiscal 2016 outlook. Nordstrom reported its results for 1Q16 after the close of financial markets on May 12. As discussed in part one and two of this series, the company missed analysts’ sales and earnings estimates for 1Q16 ended April 30, 2016.
Stock down on a YTD basis
As of May 13, Nordstrom’s stock price has fallen by 21.9% on a YTD (year-to-date) basis. The stock prices of Macy’s (M) and Kohl’s (KSS) have fallen by 12.8% and 27.9%, respectively, since the start of 2016. Both Macy’s and Kohl’s reported a decline in their sales and earnings in 1Q16.
The stock price of JCPenney (JCP) has appreciated by 8.8% on a year-to-date basis. JCPenney’s turnaround efforts helped the company in trimming its 1Q16 losses compared to 1Q15. However, the company’s sales declined by 1.6% in 1Q16. Overall, the performance of department stores in 1Q16 was impacted by an uncertain retail environment that led to higher markdowns. Nordstrom, Macy’s, Kohl’s, and JCPenney account for 0.1% of the iShares Russell 1000 ETF (IWB).
Analyst recommendations
As of May 13, 18 out of 32 analysts had a “hold” recommendation for Nordstrom’s stock. Eight analysts had a “buy” recommendation, and six analysts had a “sell” recommendation. Nordstrom’s growth investments have been putting pressure on its earnings. However, the company is optimistic about the long-term benefits of its investments in its Canada expansion and omnichannel capabilities. The company is also positive about the long-term prospects of its off-price business.
As of May 13, the 12-month price target for Nordstrom was $42.20, which reflects a 7.8% upside potential compared to the current stock price. We’ll discuss the company’s fiscal 2016 outlook and valuation in the concluding part of this series.
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