As you might know, Nordstrom, Inc. (NYSE:JWN) recently reported its third-quarter numbers. It looks like a credible result overall - although revenues of US$3.7b were what analysts expected, Nordstrom surprised by delivering a profit of US$0.81 per share, an impressive 28% above what analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Nordstrom's 15 analysts is for revenues of US$15.8b in 2021, which would reflect an okay 2.2% increase on its sales over the past 12 months. Earnings per share are expected to be US$3.53, roughly flat on the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$15.9b and earnings per share (EPS) of US$3.48 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$37.16, suggesting that the company has met expectations in its recent result. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Nordstrom analyst has a price target of US$55.00 per share, while the most pessimistic values it at US$26.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that Nordstrom's revenue growth is expected to slow, with forecast 2.2% increase next year well below the historical 3.4%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Nordstrom.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$37.16, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Nordstrom going out to 2022, and you can see them free on our platform here.
You can also see whether Nordstrom is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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