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Why Nordstrom (JWN) Stock Is Surging In After-Hours Trading

Stocks in this article: JWN

NEW YORK (TheStreet) -- Shares of Nordstrom Inc. (JWN) are up 9.90% to $67.58 in after-hours trading today after reporting earnings per diluted share of 72 cents for the first quarter ended May 3, exceeding the company's prior outlook of 60 cents to 70 cents.

The fashion specialty retailer also announced it will seek a financial partner for its Nordstrom credit card receivables, which totals approximately $2 billion.

First quarter net earnings were $140 million compared with $145 million for the same period last year. This decrease reflected planned technology investments to improve service and experience across channels and infrastructure costs related to the upcoming entry into Canada.

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Total company net sales of $2.8 billion increased 6.8% compared with the same period in fiscal 2013, and total company comparable sales increased 3.9%.

The company's annual earnings per diluted share expectations remain unchanged.

TheStreet Ratings team rates NORDSTROM INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NORDSTROM INC (JWN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 10.7%. Since the same quarter one year prior, revenues slightly increased by 0.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • NORDSTROM INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NORDSTROM INC increased its bottom line by earning $3.72 versus $3.56 in the prior year. This year, the market expects an improvement in earnings ($3.85 versus $3.72).
  • 42.14% is the gross profit margin for NORDSTROM INC which we consider to be strong. Regardless of JWN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, JWN's net profit margin of 7.22% compares favorably to the industry average.
  • In its most recent trading session, JWN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Multiline Retail industry and the overall market, NORDSTROM INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: JWN Ratings Report

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