Nordstrom Inc Valuation – December 2018 $JWN

Company Profile (excerpt from Reuters): Nordstrom, Inc., incorporated on September 28, 1946, is a fashion specialty retailer in the United States. The Company’s segments include Retail and Credit. As of March 20, 2017, the Company operated 344 the United States stores located in 40 states as well as an e-commerce business through Nordstrom.com, Nordstromrack.com/HauteLook and TrunkClub.com. As of January 28, 2017, the Company operated approximately three Nordstrom full-line stores, including two in Canada, and 21 Nordstrom Rack stores. The Company also offers its customers a variety of payment products and services, including credit and debit cards.

JWN Chart

JWN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JWN – December 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,611,864,656 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.12 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -0.38% Fail
6. Moderate PEmg Ratio PEmg < 20 17.84 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.28 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.12 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.89 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.85
MG Growth Estimate -2.94%
MG Value $7.48
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $41.32
MG Value based on 0% Growth $24.22
Market Implied Growth Rate 4.67%
Current Price $50.82
% of Intrinsic Value 679.67%

Nordstrom, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.54 in 2015 to an estimated $2.85 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.67% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Nordstrom, Inc. revealed the company was trading above its Graham Number of $20.71. The company pays a dividend of $1.48 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.84, which was below the industry average of 28.23, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-18.61.

Nordstrom, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.61
Graham Number $20.71
PEmg 17.84
Current Ratio 1.12
PB Ratio 7.28
Current Dividend $1.48
Dividend Yield 2.91%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2018
Total Current Assets $4,297,000,000
Total Current Liabilities $3,842,000,000
Long-Term Debt $2,678,000,000
Total Assets $8,709,000,000
Intangible Assets $249,000,000
Total Liabilities $7,506,000,000
Shares Outstanding (Diluted Average) 172,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.26
Jan2018 $2.59
Jan2017 $2.02
Jan2016 $3.15
Jan2015 $3.72
Jan2014 $3.71
Jan2013 $3.56
Jan2012 $3.14
Jan2011 $2.75
Jan2010 $2.01
Jan2009 $1.83
Jan2008 $2.88
Jan2007 $2.55
Jan2006 $1.98
Jan2005 $1.39
Jan2004 $0.88
Jan2003 $0.33
Jan2002 $0.46
Jan2001 $0.39
Jan2000 $0.73
Jan1999 $0.71

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.85
Jan2018 $2.78
Jan2017 $2.99
Jan2016 $3.47
Jan2015 $3.54
Jan2014 $3.31
Jan2013 $2.96
Jan2012 $2.62
Jan2011 $2.37
Jan2010 $2.21
Jan2009 $2.24
Jan2008 $2.28
Jan2007 $1.79
Jan2006 $1.28
Jan2005 $0.85
Jan2004 $0.57
Jan2003 $0.46

Recommended Reading:

Other ModernGraham posts about the company

Nordstrom Inc Valuation – February 2018 $JWN
Nordstrom Inc Valuation – May 2016 $JWN
10 Best Stocks For Value Investors This Week – 10/31/15
Nordstrom Inc. Valuation – October 2015 Update $JWN
The Best Companies of the Retail Industry – August 2015

Other ModernGraham posts about related companies

Walmart Inc Valuation – November 2018 $WMT
Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK
Big 5 Sporting Goods Corp Valuation – June 2018 $BGFV
Amazon.com Inc Valuation – June 2018 $AMZN
Fossil Group Inc Valuation – June 2018 $FOSL
Costco Wholesale Corp Valuation – June 2018 $COST
Lumber Liquidators Holdings Inc Valuation – June 2018 $LL
CVS Health Corp Valuation – June 2018 $CVS
Target Corp Valuation – June 2018 $TGT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Nordstrom Inc Valuation – February 2018 $JWN

Company Profile (obtained from Marketwatch): Nordstrom, Inc. engages in the manufacture and trade of clothes, shoes, and accessories. It operates through the following business segments: Retail; Credit; and Corporate/Other. The Retail segment manages physical stores and online shops. The Credit segment offers a range of payment options to customers. The Corporate/Other segment includes sales return reserve, expenses, and assets. The company was founded by John W. Nordstrom in 1901 and is headquartered in Seattle, WA.

JWN Chart

JWN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JWN – February 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,500,696,964 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.00 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 22.00% Fail
6. Moderate PEmg Ratio PEmg < 20 17.79 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.09 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.00 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 335.13 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.87
MG Growth Estimate -2.02%
MG Value $12.80
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $41.60
MG Value based on 0% Growth $24.38
Market Implied Growth Rate 4.64%
Current Price $51.03
% of Intrinsic Value 398.55%

Nordstrom, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.31 in 2014 to an estimated $2.87 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.64% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Nordstrom, Inc. revealed the company was trading above its Graham Number of $18.18. The company pays a dividend of $1.48 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.79, which was below the industry average of 48.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.83.

Nordstrom, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.83
Graham Number $18.18
PEmg 17.79
Current Ratio 1.00
PB Ratio 10.09
Current Dividend $1.48
Dividend Yield 2.90%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2017
Total Current Assets $3,479,000,000
Total Current Liabilities $3,471,000,000
Long-Term Debt $2,681,000,000
Total Assets $8,186,000,000
Intangible Assets $238,000,000
Total Liabilities $7,332,000,000
Shares Outstanding (Diluted Average) 168,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.87
Jan2017 $2.02
Jan2016 $3.15
Jan2015 $3.72
Jan2014 $3.71
Jan2013 $3.56
Jan2012 $3.14
Jan2011 $2.75
Jan2010 $2.01
Jan2009 $1.83
Jan2008 $2.88
Jan2007 $2.55
Jan2006 $1.98
Jan2005 $1.39
Jan2004 $0.88
Jan2003 $0.33
Jan2002 $0.46
Jan2001 $0.39
Jan2000 $0.73
Jan1999 $0.71
Jan1998 $0.60

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.87
Jan2017 $2.99
Jan2016 $3.47
Jan2015 $3.54
Jan2014 $3.31
Jan2013 $2.96
Jan2012 $2.62
Jan2011 $2.37
Jan2010 $2.21
Jan2009 $2.24
Jan2008 $2.28
Jan2007 $1.79
Jan2006 $1.28
Jan2005 $0.85
Jan2004 $0.57
Jan2003 $0.46
Jan2002 $0.54

Recommended Reading:

Other ModernGraham posts about the company

10 Best Stocks For Value Investors This Week – 10/31/15
Nordstrom Inc. Valuation – October 2015 Update $JWN
The Best Companies of the Retail Industry – August 2015
The 16 Best Stocks For Value Investors This Week – 8/1/15
Nordstrom Inc. Analysis – July 2015 Update $JWN

Other ModernGraham posts about related companies

Costco Wholesale Corp Valuation – September 2017 $COST
McKesson Corp Valuation – August 2017 $MCK
Big 5 Sporting Goods Corp Valuation – Initial Coverage $BGFV
Amazon.com Inc Valuation – August 2017 $AMZN
Fossil Group Inc Valuation – March 2017 $FOSL
Lumber Liquidators Holdings Inc Valuation – Initial Coverage $LL
CVS Health Corp Valuation – March 2017 $CVS
Target Corp Valuation – March 2017 $TGT
Foot Locker Inc Valuation – Initial Coverage $FL
Ulta Beauty Inc Valuation – Initial Coverage $ULTA

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Nordstrom Inc Valuation – May 2016 $JWN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – March 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Nordstrom Inc (JWN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Nordstrom, Inc. is a fashion specialty retailer in the United States. The company operates through two segments: Retail and Credit. The Retail segment includes approximately 115 Nordstrom branded full-line stores in the United States and Nordstrom.com, approximately 167 off-price Nordstrom Rack stores, two Canada full-line stores, Nordstromrack.com and HauteLook, and other retail channels, including five Trunk Club showrooms and TrunkClub.com, its two Jeffrey boutiques and one clearance store that operates under the name Last Chance. Credit segment includes its wholly owned federal savings bank, Nordstrom fsb, through which it provides a private label credit card, two Nordstrom VISA credit cards and a debit card. The Company operated 290 United States stores located in 38 states, as well as an e-commerce business through Nordstrom.com, Nordstromrack.com and HauteLook and TrunkClub.com, as of March 16, 2015. It also operates two Nordstrom full-line stores in Canada.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of JWN – May 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,741,747,823 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.02 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 39.14% Pass
6. Moderate PEmg Ratio PEmg < 20 12.46 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.86 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.02 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 49.57 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

JWN value chart May 2016

EPSmg $3.14
MG Growth Estimate 0.90%
MG Value $32.40
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $45.57
MG Value based on 0% Growth $26.71
Market Implied Growth Rate 1.98%
Current Price $39.16
% of Intrinsic Value 120.88%

Nordstrom, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.96 in 2013 to an estimated $3.14 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.98% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Nordstrom, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

JWN charts May 2016

Net Current Asset Value (NCAV) -$21.81
Graham Number $16.67
PEmg 12.46
Current Ratio 1.02
PB Ratio 7.86
Current Dividend $1.48
Dividend Yield 3.78%
Number of Consecutive Years of Dividend Growth 7

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 4/1/2016
Total Current Assets $2,992,000,000
Total Current Liabilities $2,936,000,000
Long-term Debt $2,776,000,000
Total Assets $7,699,000,000
Intangible Assets $435,000,000
Total Liabilities $6,824,000,000
Shares Outstanding (Diluted Average) 175,700,000

Earnings Per Share History

Next Fiscal Year Estimate $2.48
1/1/2016 $3.15
1/1/2015 $3.72
1/1/2014 $3.71
1/1/2013 $3.56
1/1/2012 $3.14
1/1/2011 $2.75
1/1/2010 $2.01
1/1/2009 $1.83
1/1/2008 $2.88
1/1/2007 $2.55
1/1/2006 $1.98
1/1/2005 $1.39
1/1/2004 $0.88
1/1/2003 $0.33
1/1/2002 $0.47
1/1/2001 $0.39
1/1/2000 $0.73
1/1/1999 $0.71
1/1/1998 $0.60
1/1/1997 $0.46

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.14
1/1/2016 $3.47
1/1/2015 $3.54
1/1/2014 $3.31
1/1/2013 $2.96
1/1/2012 $2.62
1/1/2011 $2.37
1/1/2010 $2.21
1/1/2009 $2.24
1/1/2008 $2.28
1/1/2007 $1.79
1/1/2006 $1.28
1/1/2005 $0.85
1/1/2004 $0.58
1/1/2003 $0.46
1/1/2002 $0.54
1/1/2001 $0.58

Recommended Reading:

Other ModernGraham posts about the company

10 Best Stocks For Value Investors This Week – 10/31/15
Nordstrom Inc. Valuation – October 2015 Update $JWN
The Best Companies of the Retail Industry – August 2015
The 16 Best Stocks For Value Investors This Week – 8/1/15

Other ModernGraham posts about related companies

Tractor Supply Company Valuation – May 2016 $TSCO
Fossil Group Inc Stock Valuation – February 2016 $FOSL
TJX Companies Inc Valuation – February 2016 Update $TJX
Coach Inc Valuation – February 2016 Update $COH
Tiffany & Company Valuation – February 2016 Update $TIF
Urban Outfitters Inc Valuation – January 2016 Update $URBN
TJX Companies Inc Valuation – February 2016 Update $TJX
Coach Inc Valuation – February 2016 Update $COH
Tiffany & Company Valuation – February 2016 Update $TIF
Urban Outfitters Inc Valuation – January 2016 Update $URBN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Nordstrom Inc. Valuation – October 2015 Update $JWN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – October 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Nordstrom Inc. (JWN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Nordstrom, Inc. is a fashion specialty retailer in the United States. The company operates through two segments: Retail and Credit. The Retail segment includes approximately 115 Nordstrom branded full-line stores in the United States and Nordstrom.com, approximately 167 off-price Nordstrom Rack stores, two Canada full-line stores, Nordstromrack.com and HauteLook, and other retail channels, including five Trunk Club showrooms and TrunkClub.com, its two Jeffrey boutiques and one clearance store that operates under the name Last Chance. Credit segment includes its wholly owned federal savings bank, Nordstrom fsb, through which it provides a private label credit card, two Nordstrom VISA credit cards and a debit card. The Company operated 290 United States stores located in 38 states, as well as an e-commerce business through Nordstrom.com, Nordstromrack.com and HauteLook and TrunkClub.com, as of March 16, 2015. It also operates two Nordstrom full-line stores in Canada.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of JWN – October 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,184,446,062 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.57 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 54.96% Pass
6. Moderate PEmg Ratio PEmg < 20 17.52 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.02 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.57 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.42 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

JWN value Chart October 2015

EPSmg $3.69
MG Growth Estimate 6.15%
MG Value $76.78
Opinion Fairly Valued
MG Value based on 3% Growth $53.52
MG Value based on 0% Growth $31.38
Market Implied Growth Rate 4.51%
Current Price $64.66
% of Intrinsic Value 84.22%

Nordstrom Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio and the high PB ratio.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.62 in 2012 to an estimated $3.69 for 2016.  This level of demonstrated earnings growth supports the market’s implied estimate of 4.51% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Nordstrom Inc. (JWN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

JWN Charts October 2015

Net Current Asset Value (NCAV) -$9.18
Graham Number $33.73
PEmg 17.52
Current Ratio 1.57
PB Ratio 5.02
Dividend Yield 2.17%
Number of Consecutive Years of Dividend Growth 6

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $5,432,000,000
Total Current Liabilities $3,456,000,000
Long-Term Debt $2,808,000,000
Total Assets $9,700,000,000
Intangible Assets $447,000,000
Total Liabilities $7,209,000,000
Shares Outstanding (Diluted Average) 193,500,000

Earnings Per Share History

Next Fiscal Year Estimate $3.82
Jan15 $3.72
Jan14 $3.71
Jan13 $3.56
Jan12 $3.14
Jan11 $2.75
Jan10 $2.01
Jan09 $1.83
Jan08 $2.88
Jan07 $2.55
Jan06 $1.98
Jan05 $1.39
Jan04 $0.88
Jan03 $0.33
Jan02 $0.46
Jan01 $0.39
Jan00 $0.73
Jan99 $0.71
Jan98 $0.60
Jan97 $0.46
Jan96 $0.51

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.69
Jan15 $3.54
Jan14 $3.31
Jan13 $2.96
Jan12 $2.62
Jan11 $2.37
Jan10 $2.21
Jan09 $2.24
Jan08 $2.28
Jan07 $1.79
Jan06 $1.28
Jan05 $0.85
Jan04 $0.57
Jan03 $0.46
Jan02 $0.54
Jan01 $0.58
Jan00 $0.65

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Retail Industry – August 2015
Nordstrom Inc. Analysis – July 2015 Update $JWN
21 Companies in the Spotlight This Week – 5/9/15
Nordstrom Inc. Quarterly Valuation – May 2015 $JWN
34 Companies in the Spotlight This Week – 2/7/15

Other ModernGraham posts about related companies

Tractor Supply Company Valuation – October 2015 Update $TSCO
Coach Inc. Valuation – October 2015 Update $COH
Dollar Tree Stores Inc. Valuation – October 2015 Update $DLTR
TJX Companies Inc. Valuation – October 2015 Update $TJX
Tiffany and Company Valuation – October 2015 Update $TIF
Urban Outfitters Inc. Analysis – October 2015 Update $URBN
Staples Inc. Analysis – September 2015 Update $SPLS
Fossil Group Inc. Analysis – September 2015 Update $FOSL
Ross Stores Inc. Analysis – August 2015 Update $ROST
The Best Companies of the Retail Industry – August 2015

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Nordstrom Inc. Analysis – July 2015 Update $JWN

500px-Nordstrom_Logo.svgNordstrom Inc. (JWN) may intrigue many investors due to its healthy earnings growth over the last several years and relatively strong dividend yield. In addition, several qualitative factors make the company interesting. For example, Seeking Alpha contributor Equity Watch recently wrote that the company’s online presence will help propel growth further, while contributor Nicholas Mushaike believes the company has good management. On the other hand, contributor Josh Arnold is concerned by the company’s margins. These are great issues to consider, but one must first look at a quantitative analysis of the company.

In fact, Benjamin Graham, the father of value investing, taught that the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to determine a potential investment’s merits. Here’s an updated look at how the company fares in the ModernGraham valuation model.

This model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using the ModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

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Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – FAIL
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – Earnings per share has increased by at least one-third over the last 10 years, using three-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests tobe suitable for a Defensive Investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings Growth – EPSmg greater than that 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $76.39
MG Value $72.42
MG Opinion Fairly Valued
Value Based on 3% Growth $52.51
Value Based on 0% Growth $30.78
Market Implied Growth Rate 6.30%
Net Current Asset Value (NCAV) -$8.15
PEmg 21.09
Current Ratio 1.84
PB Ratio 5.83

Balance Sheet – April 2015

Current Assets $5,418,000,000
Current Liabilities $2,950,000,000
Total Debt $3,138,000,000
Total Assets $9,562,000,000
Intangible Assets $447,000,000
Total Liabilities $7,007,000,000
Outstanding Shares 194,900,000

Earnings Per Share

2016 (estimate) $3.61
2015 $3.72
2014 $3.71
2013 $3.56
2012 $3.14
2011 $2.75
2010 $2.01
2009 $1.83
2008 $2.88
2007 $2.55
2006 $1.98

Earnings Per Share – ModernGraham

2016 (estimate) $3.62
2015 $3.54
2014 $3.31
2013 $2.96
2012 $2.62
2011 $2.37

Dividend History

Free Cash Flow

Conclusion

Nordstrom Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned by the low current ratio, and the high PEmg and PB ratios, while the Enterprising Investor is only concerned by the level of debt relative to the net current assets. Therefore, all Enterprising Investors should feel very comfortable proceeding with the next stage of the analysis, which is a determination of an estimate of intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $2.62 in 2012 to an estimated $3.62 for 2016. This level of demonstrated growth is in line with the market’s implied estimate for earnings growth of 6.3% over the next 7-10 years.

The company’s recent earnings history shows an average annual growth in EPSmg of around 7.7%. The ModernGraham valuation model reduces such a rate to a more conservative figure, assuming some slowdown will occur, but still returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating Nordstrom Inc. is fairly valued at the present time.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

Nordstrom Inc. Quarterly Valuation – May 2015 $JWN

500px-Nordstrom_Logo.svgNordstrom Inc. (NYSE:JWN) should attract all Enterprising Investors, particularly due to the company’s stable earnings growth over the last few years. That said, Benjamin Graham, the father of value investing, taught that the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to determine a potential investment’s merits. Here’s an updated look at how the company fares in the ModernGraham valuation model.

This model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company. By using the ModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

JWN Chart

JWN data by YCharts

[level-free]
To read the rest of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.
[/level-free]
[level-mg-stocks-screens-subscriber]

Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – FAIL
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – Earnings per share has increased by at least one-third over the last 10 years, using three-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests, or be suitable for a Defensive Investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings Growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $77.12
MG Value $82.57
MG Opinion Fairly Valued
Value Based on 3% Growth $51.38
Value Based on 0% Growth $30.12
Market Implied Growth Rate 6.63%
Net Current Asset Value (NCAV) -$8.14
PEmg 21.76
Current Ratio 1.87
PB Ratio 6.14

Balance Sheet – January 2015

Current Assets $5,224,000,000
Current Liabilities $2,800,000,000
Total Debt $3,123,000,000
Total Assets $9,245,000,000
Intangible Assets $435,000,000
Total Liabilities $6,805,000,000
Outstanding Shares 194,200,000

Earnings Per Share

2015 $3.72
2014 $3.71
2013 $3.56
2012 $3.14
2011 $2.75
2010 $2.01
2009 $1.83
2008 $2.88
2007 $2.55
2006 $1.98
2005 $1.39

Earnings Per Share – ModernGraham

2015 $3.54
2014 $3.31
2013 $2.96
2012 $2.62
2011 $2.37
2010 $2.21

Dividend History

JWN Dividend Chart

JWN Dividend data by YCharts

Conclusion

Nordstrom should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the low current ratio along with the high PEmg and PB ratios while the Enterprising Investor is only concerned by the 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 $3.54 for 2015. This level of demonstrated growth is in line with the market’s implied estimate for earnings growth of 6.63% 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.

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Nordstrom Inc. Quarterly Valuation – February 2015 $JWN

500px-Nordstrom_Logo.svg

Nordstrom Inc. should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the low current ratio and the high PEmg and PB ratios, while the Enterprising Investor’s only concern is the 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 $3.54 for 2015. This is a strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 6.77% 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. (JWN) for greater perspective!

Read the full valuation on Seeking Alpha!

JWN Chart

JWN data by YCharts

Disclaimer:  The author did not hold a position in Nordstrom Inc. (JWN) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Nordstrom Inc. Quarterly Valuation – October 2014 $JWN

500px-Nordstrom_Logo.svg

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!

JWN Chart

JWN data by YCharts

Nordstrom Inc. Quarterly Valuation – July 2014 $JWN

200px-Dow_Chemical_Company_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Defensive Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Nordstrom Inc. (JWN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Nordstrom, Inc. is a fashion specialty retailer. As of March 18, 2013, the Company operates 242 United States stores located in 31 states, as well as an e-commerce business through nordstrom.com. The Company operates in two segments: Retail and Credit. As of December February 02, 2013, the Company had opened two Nordstrom Rack stores (Boston, Massachusetts and Upland, California). As of March 18, 2013, the Retail segment includes its 117 Nordstrom branded full-line stores and its online store at www.nordstrom.com, its 121 off-price Nordstrom Rack stores, one clearance store that operates under the name Last Chance and its other retail channels, including its online private sale subsidiary HauteLook, its two Jeffrey boutiques and one treasure&bond store. Its Credit segment includes its wholly owned federal savings bank, Nordstrom fsb, through which the Company provides a private label credit card, two Nordstrom VISA credit cards and a debit card.
JWN Chart

JWN data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years - PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 - PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $67.78
MG Value $85.40
MG Opinion Fairly Valued
Value Based on 3% Growth $51.96
Value Based on 0% Growth $30.46
Market Implied Growth Rate 5.21%
Net Current Asset Value (NCAV) -$7.34
PEmg 18.92
Current Ratio 1.98
PB Ratio 6.30

Balance Sheet – 5/3/2014

Current Assets $5,207,000,000
Current Liabilities $2,631,000,000
Total Debt $3,110,000,000
Total Assets $8,633,000,000
Intangible Assets $175,000,000
Total Liabilities $6,597,000,000
Outstanding Shares 189,300,000

Earnings Per Share

2015 (estimate) $3.84
2014 $3.71
2013 $3.56
2012 $3.14
2011 $2.75
2010 $2.01
2009 $1.83
2008 $2.87
2007 $2.55
2006 $1.98
2005 $1.38

Earnings Per Share – ModernGraham

2015 (estimate) $3.58
2014 $3.31
2013 $2.96
2012 $2.62
2011 $2.37
2010 $2.20

Dividend History

JWN Dividend Chart

JWN Dividend data by YCharts

Conclusion:

Nordstrom qualifies for the Enterprising Investor but not the Defensive Investor. The Defensive Investor has concerns with the low current ratio and the high PB ratio. The Enterprising Investor’s only issue is with the high level of debt relative to the net current assets. As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities including a review of ModernGraham’s valuation of Macy’s (M) and ModernGraham’s valuation of The TJX Companies (TJX). From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.37 in 2011 to an estimated $3.58 for 2015. This level of demonstrated growth supports the market’s implied estimate of 5.21% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

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

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Nordstrom Inc. (JWN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Nordstrom Inc. (JWN) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Nordstrom Inc. (JWN) Quarterly Valuation – April 2014

500px-Nordstrom_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing 5 Undervalued Companies for the Defensive Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Nordstrom Inc. (JWN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Nordstrom, Inc. is a fashion specialty retailer. As of March 18, 2013, the Company operates 242 United States stores located in 31 states, as well as an e-commerce business through nordstrom.com. The Company operates in two segments: Retail and Credit. As of December February 02, 2013, the Company had opened two Nordstrom Rack stores (Boston, Massachusetts and Upland, California). As of March 18, 2013, the Retail segment includes its 117 Nordstrom branded full-line stores and its online store at www.nordstrom.com, its 121 off-price Nordstrom Rack stores, one clearance store that operates under the name Last Chance and its other retail channels, including its online private sale subsidiary HauteLook, its two Jeffrey boutiques and one treasure&bond store. Its Credit segment includes its wholly owned federal savings bank, Nordstrom fsb, through which the Company provides a private label credit card, two Nordstrom VISA credit cards and a debit card.

JWN Chart

JWN data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $60.98
MG Value $78.29
MG Opinion Fairly Valued
Value Based on 3% Growth $48.06
Value Based on 0% Growth $28.17
Market Implied Growth Rate 4.95%
Net Current Asset Value (NCAV) -$6.62
PEmg 18.40
Current Ratio 2.06
PB Ratio 5.61

Balance Sheet – 2/1/2014

Current Assets $5,228,000,000
Current Liabilities $2,541,000,000
Total Debt $3,106,000,000
Total Assets $8,574,000,000
Intangible Assets $175,000,000
Total Liabilities $6,494,000,000
Outstanding Shares 191,200,000

Earnings Per Share

2014 $3.71
2013 $3.56
2012 $3.14
2011 $2.75
2010 $2.01
2009 $1.83
2008 $2.87
2007 $2.55
2006 $1.98
2005 $1.38

Earnings Per Share – ModernGraham

2014 $3.31
2013 $2.96
2012 $2.62
2011 $2.37
2010 $2.20
2009 $2.24

Dividend History

JWN Dividend Chart

JWN Dividend data by YCharts

Conclusion:

Nordstrom Inc. is suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor’s only gripe is the high PB ratio, and the Enterprising Investor’s only issue is the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research into the company and comparing it to a competitor through a review of ModernGraham’s valuation of Macy’s Inc. (M) while keeping in mind the 7 Key Tips to Value Investing.  From a valuation perspective, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.20 in 2010 to $3.31 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 4.95% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that falls within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Nordstrom Inc. (JWN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Nordstrom Inc. (JWN) or any other company mentioned in the article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

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