Shares of Nordstrom Inc. (JWN) have been riding on the company’s consistent store-growth initiatives, flourishing customer strategy reflecting growth across channels and its latest Trunk Club acquisition bearing fruit that in turn, led to strong third-quarter fiscal 2014 results.
Benefiting from the aforementioned factors, shares of the company hit a 52-week high of $77.15 yesterday, before eventually closing at $75.89 and amassing a year-to-date return of 24.3%.
The company recently posted strong third-quarter results where its quarterly earnings of 73 cents per share came ahead of the Zacks Consensus Estimate of 71 cents and in line with the company’s expectations. Earnings also rose 5.8% from the comparable prior-year quarter figure. On an average, the company has delivered a positive earnings surprise of nearly 4% over the past 6 quarters.
Also, backed by robust comparable-store sales growth, Nordstrom’s total revenue of $3,140 million registered about 8.9% year-over-year growth and surpassed the Zacks Consensus Estimate of $3,108 million. Shares of the company have jumped 3.6% since the announcement.
Apart from this, the company has been making continuous efforts toward its store expansion. In fact, quite recently, Nordstrom announced its plan to introduce another Rack store in Florida. This will mark the company’s ninth Rack store in South Florida.
Nordstrom’s focus on store expansion is evident from the series of Rack store openings since the beginning of fiscal 2014. Its latest store openings signify the company’s commitment toward strengthening its network with the aim of driving top-line growth. Since the beginning of fiscal 2014, this Zacks Rank #3 (Hold) company has opened 29 stores and currently operates a total of 289 outlets across 37 U.S. states and Canada.
Moreover, in a move to capture the rapidly growing men’s clothing market, Nordstrom recently completed the acquisition of Chicago-based provider of personalized clothing services for men, Trunk Club. We believe that this acquisition strategically fits Nordstrom’s business model.
Also, the company enjoys a healthy financial status as is evident from its regular dividend payments. Dividend payments highlight a company’s stable cash position and cash flow generating capacity, indicating that it can be a growth and income stock.
All these factors speak positively about the company and highlight its solid growth prospects. Further, Nordstrom is currently trading at a forward P/E of 20.2x, a 25.2% discount to the peer group average of 27x, which hints at a positive upside potential for the stock.
Apart from Nordstrom, L Brands, Inc. (LB), Macy's, Inc. (M) and Lowe's Companies Inc. (LOW) also hit 52-week highs of $81.12, $65.15 and $64.14, respectively, on Nov 25, 2014.
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