Nordstrom (JWN) Stock Stays on the Rack, Could Find Support at $55
NEW YORK (TheStreet) -- Shares of Nordstrom (JWN) - Get Report have been marked down all year, but prices have not yet reached the clearance level.
JWN made a new low close yesterday, reinforcing the downtrend seen in the chart above. Troubles for JWN started back in March when there was a failed upthrust, and prices began trending lower. The slopes of the 50-day and the 200-day moving averages are negative, which defines the trend as down. The On-Balance-Volume (OBV) line has been declining sharply since August, signaling liquidation, and last, we don't find any meaningful bullish divergences with the momentum study.
This longer-term chart of JWN, above, shows that the bulk of the 2014 advance has been retraced. JWN is digging into old resistance, but the Moving Average Convergence Divergence oscillator is still negative. The $55 level could be the next magnet for prices as it has acted as both resistance and support in 2012 and 2013. JWN may have to reach a clearance level to stimulate buyers to return to this retailer.
TheStreet Ratings team rates NORDSTROM INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate NORDSTROM INC (JWN) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, growth in earnings per share, expanding profit margins and increase in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- JWN's revenue growth has slightly outpaced the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 9.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has increased to $207.00 million or 36.18% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.07%.
- NORDSTROM INC has improved earnings per share by 14.7% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, NORDSTROM INC's EPS of $3.72 remained unchanged from the prior years' EPS of $3.72. This year, the market expects an improvement in earnings ($3.78 versus $3.72).
- 40.91% 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 5.70% compares favorably to the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Multiline Retail industry and the overall market, NORDSTROM INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- You can view the full analysis from the report here: JWN
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.