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Will This Analyst Downgrade Hurt Nordstrom (JWN) Stock Today?

NEW YORK (TheStreet) -- Goldman Sachs downgraded Nordstrom  (JWN) to "neutral" from "buy" and set a $74 price target. The firm noted the company's recent outperformance leaves shares trading at at a 16.5X multiple.

The stock closed at $68.09 on Friday.

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Separately, 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, good cash flow from operations, increase in stock price during the past year, expanding profit margins 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 7.5%. Since the same quarter one year prior, revenues slightly increased by 6.6%. 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.
  • Net operating cash flow has increased to $217.00 million or 34.78% when compared to the same quarter last year. In addition, NORDSTROM INC has also vastly surpassed the industry average cash flow growth rate of -79.52%.
  • 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 ($3.90 versus $3.72).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • 41.86% 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 4.77% compares favorably to the industry average.
  • You can view the full analysis from the report here: JWN Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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