|Bid||103.89 x 1100|
|Ask||107.42 x 1100|
|Day's Range||108.52 - 109.22|
|52 Week Range||84.82 - 109.40|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.07|
|Expense Ratio (net)||0.40%|
Consumer discretionary ETFs have had a stellar run in the 10-year old bull market, having beaten the S&P 500. Will the rally continue?
Shares of Nordstrom (NYSE:JWN) traded slightly lower after the department store retailer reported holiday quarter numbers that were largely mixed. Broadly speaking, earnings were strong, while revenues weren't, and the fiscal 2019 guide implies that this trend of weak top-line performance but strong bottom-line performance will persist for the foreseeable future. Investors weren't sure how to react to that news. Initially, JWN stock popped a few percentage points. Then, it reversed course, ending Friday trading the red.Source: Phillip Pessar via Flickr (Modified)In the big picture, continued weakness in JWN stock is a near-to-medium term buying opportunity. Four months ago, this was nearly a $70 stock. Now, it sits below $50. The 65-stock Invesco S&P 500 Equal Wt Cnsm Disc ETF (NYSEArca:RCD) is up 11.4% since early December while Nordstrom stock is down 4.8%.What's changed? Not enough to warrant a 30% discount in the Nordstrom stock price. To be sure, the quarter wasn't great. The full-price business is slowing and margins remain under pressure. But, its full-price retail is slowing because of tougher comps, and is stable in a long-term window.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMargins are also expected to stabilize next year, thanks to full-price business improvements and cost cutting measures. Meanwhile, the off-price business is firing on all cylinders, and digital sales growth remains robust.Overall, while there are some signs of weakness, the overall JWN growth narrative remains largely healthy today. Yet at current levels, Nordstrom stock isn't priced for healthy, a disconnect that can't last for much longer. The retailer's numbers will improve throughout 2019. As they do, JWN stock will bounce back, and the shares will likely end the year close to $60. A Mixed Big PictureThe Nordstrom narrative can be summed up in four words: good, but not great.In 2018, Nordstrom was staging a huge comeback as the broader retail scene stabilized after years of losing share to the e-commerce market. Nordstorm led the pack in finding its footing via a robust omni-channel presence and unique value prop as a medium-to high-end retailer. That proposition enabled the Seattle-based operator to drive consistently positive comp sales growth at both its full- and off-price stores. Wall Street bought into this idea that Nordstrom was back to its normal self, pushing JWN stock to near $70 a share. * 7 March Madness Stocks to Consider for the Big Dance Unfortunately, that isn't what's happening because Nordstrom continues to operate in a world where consumers can buy clothes from its neighbor Amazon (NASDAQ:AMZN) and other e-commerce retailers. Granted, Nordstrom is a medium-to high-end retailer with mitigated product portfolio overlap with other retailers. But, there is still some overlap, and that means that the retailer will continue to feel some competitive friction for the foreseeable future.This is what investors are seeing in the numbers now. As the lap got tougher in late 2018, comparable sales growth slowed. But, comps are still up on a two-year basis and are expected to be narrowly positive again next year. In other words, growth isn't on a runaway train to new highs, but rather on a slow and steady path higher.Overall, the Nordstrom narrative is a mixed bag. You have a retailer that clearly has staying power on the retail scene thanks to its unique value prop and product portfolio. But, staying power doesn't equal robust growth and because competition is as intense as ever, stamina over the next several years will translate into relatively muted top- and bottom-line growth. Still, that's good enough to warrant buying JWN stock at currently depressed levels. Nordstrom Stock is UndervaluedThe math behind buying JWN stock at current levels is pretty simple.You have a company that has a red-hot off-price business that has been, still is, and will continue to fire on all cylinders thanks to its ability to integrate reasonable prices with good quality. Meanwhile, the full-price business is slowing thanks to tougher laps. But, those laps get easier later in 2019, so growth should come back into the picture. Importantly, this business should remain a tepid grower over the next several years. * 9 Best Stocks to Buy on U.S.-China Trade Optimism Gross margins will get hit early in the year thanks to full-price weakness. But, as that business stabilizes in late 2019 and in the long term, gross margins should stabilize, too. The SG&A rate has been consistently rising. That, too, will end as generational investments phase out and the company continues to pull costs out of the system.So, in the big picture, Nordstrom should be able to grow sales at a tepid 1-2% rate over the next several years, while stabilizing EBIT margins in 6-7% range. Those growth assumptions, coupled with share buybacks, pave a path for Nordstrom to hit $5 in EPS by fiscal 2025, up from the current $3.32. Based on a market-average 16x forward multiple, that equates to a fiscal 2024 price target for JWN stock of $80. Discounted back by 7% per year (3 points below my normal 10% discount rate to account for the yield), that gives you a fiscal 2019 price target of roughly $57. Bottom Line on JWN StockThe Nordstrom story isn't great. But, it isn't awful either. Right now, JWN stock is priced for awful. This disconnect cannot last forever. Nordstrom's numbers will improve throughout 2019 as the lap gets easier. As those numbers improve, Nordstrom stock will rise, and prices close to $60 look achievable by year end.As of this writing, Luke Lango was long JWN and AMZN. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Reasons Kraft Heinz Stock Is a Contrarian Buy * 5 Housing Stocks to Buy for Renewed Homebuilder Confidence * 7 of the Best ETFs to Buy for a Rock-Solid Portfolio Compare Brokers The post Here's How Nordstrom Stock Can Rally Back Toward $60 In This Year appeared first on InvestorPlace.
PVH (PVH), which reported second-quarter results on August 29, posted 29% YoY (year-over-year) growth in earnings to $2.18 per share. It was the 17th consecutive earnings beat for the company. Analysts polled by Thomson Reuters, in comparison, had projected a 24.3% YoY increase in EPS to $2.10 for the quarter. The company also exceeded the upper end of its $2.05–$2.10 earnings guidance range.
L Brands (LB) reported financial results for the second quarter of 2018 after the market closed on August 22, 2018. Its adjusted diluted earnings per share fell 29% YoY (year-over-year) to $0.36 but were two cents more than the consensus forecasts. Despite the earnings beat, L Brands’ stock price plunged 11.4% to close at $28.25 on August 23.
Can PVH Corp. Meet Second-Quarter Expectations? PVH Corp. (PVH), the parent company of Calvin Klein and Tommy Hilfiger, is slated to report its second-quarter results on August 29. PVH management is looking for a 10% YoY (year-over-year) rise in second-quarter total sales.
L Brands is slated to report second-quarter 2018 results after the market closes on Wednesday, August 22, 2018. Wall Street is expecting a 6.4% YoY (year-over-year) jump in L Brands’s total sales to $2.93 billion for the quarter. L Brands’s stock market performance has been below average this year.
Under Armour (UAA) posted an adjusted net loss of $34.0 million ($0.08 per share) as it reported its second-quarter results on July 26. While its profitability deteriorated when compared with last year’s net loss of $12.0 million ($0.03 per share), its earnings were in line with Wall Street’s projections. Under Armour hasn’t missed Wall Street’s earnings expectations in the last six consecutive quarters.
Under Armour (UAA) reported its second-quarter results on July 26. The company reported an 8.0% YoY (year-over-year) increase in revenues to $1.17 billion, beating the consensus by $27.0 million. Its earnings were in line with forecasts and stood at $0.08, compared to $0.03 in the same quarter last year.
VF Corporation (VFC) reported a 56% YoY (year-over-year) improvement in its first-quarter earnings. The quarter ended on June 30. It reported the results on July 20.
Under Armour (UAA) is slated to report results for the second quarter, which ended on June 30, before the market opens on Thursday, July 26. Wall Street has projected a net loss of $36 million, or eight cents per share, on total sales of $1.15 billion, which would be a 5.5% increase YoY.
PVH (PVH), which reported its first-quarter results on May 30, delivered its seventh consecutive top-line beat. Its total sales rose 16.4% YoY (year-over-year) to $2.3 billion, $32 million more than Wall Street expected. Currency boosted sales by six percentage points.
As we’ve discussed in this series, Michael Kors (KORS) beat market expectations for both its top and bottom lines during the fourth quarter. Around $570 million to $580 million is likely to come from the Jimmy Choo acquisition. Michael Kors’s comps are likely to stay flat, driving retail sales at a mid-single-digit rate.
Dollar General (DG), the United States’ leading discount store retailer, is slated to report its first-quarter results on May 31. Wall Street has projected stellar 36% YoY (year-over-year) growth in the company’s earnings per share to $1.40 during the quarter. DG outdid Wall Street’s bottom-line expectations in all four quarters of 2017.
On May 10, L Brands (LB) stock slid more than 7% in the stock market. L Brands’ management revised its 1Q18 profit outlook. Management said it expects the earnings per share to be at the lower end of its $0.15–$0.20 guidance range.
North Carolina–based Hanesbrands (HBI) reported its 1Q18 results on May 1. The results relate to the three-month period ended March 31. The company beat Wall Street’s top- and bottom-line expectations.
North Carolina–based Hanesbrands (HBI) is slated to report its 1Q18 results on Tuesday, May 1. On average, Wall Street is expecting a 3.8% YoY (year-over-year) jump in HBI’s total sales to ~$1.4 billion during the quarter.