Nordstrom Inc. Quarterly Valuation – October 2014 $JWN

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After reviewing the data, Nordstrom should satisfy the Enterprising Investor but not the Defensive Investor. The Defensive Investor is concerned with the low current ratio as well as the high PEmg and PB ratios, while the Enterprising Investor’s only issue with the company is the high level of debt relative to the net current assets. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $2.37 in 2011 to an estimated $3.52 for 2015. This is a fairly strong level of demonstrated growth which is in line with the market’s implied estimate for earnings growth of 5.92% over the next 7-10 years. The ModernGraham valuation model therefore returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.

Be sure to check out previous ModernGraham valuations of Nordstrom Inc. for more perspective!

Read the full valuation on Seeking Alpha!

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