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Nordstrom and PayPal have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – March 11, 2022 – Zacks Equity Research shares Nordstrom Inc. (JWN - Free Report) as the Bull of the Day and PayPal (PYPL - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. (NVDA - Free Report) , Advanced Micro Devices (AMD - Free Report) and Micron Technology (MU - Free Report) .
Headquartered in Seattle, Nordstrom Inc. is a leading fashion specialty retailer in the United States. The company offers an extensive selection of both branded and private-label merchandise, which are positioned in the upscale segment of the industry through its Nordstrom branded full-line stores; Nordstrom Rack stores; clearance stores under the Last Chance name; Trunk Club clubhouses; and Nordstrom Local.
Shares Skyrocket 38% After Q4 Earnings
Net sales climbed 23% year-over-year to $4.5 billion, and decreased just 1% compared to Q4 2019, showing investors that its top line has now almost completely recovered from the coronavirus pandemic.
Sales also rebounded 23% at Nordstrom Rack during the quarter. The retailer’s discount segment has been under a lot of pressure because of the supply chain crisis, which led to struggles to obtain enough inventory.
Digital sales fell a slight 1% year-over-year, but represented 44% of total sales during the all-important holiday quarter, as well as 42% of sales for the full fiscal year.
Notably, sales in Nordstrom’s home, active, designer, beauty, and kids categories showed the strongest growth compared with the fourth quarter of 2019, while its Southern Markets, including Southern California, was its best performing region.
Gross margin improved by five percentage points to 38%, driven partially by lower promotional activity. This resulted in an increase in operating income to $299 million and a sixfold rise in net earnings to $200 million, or $1.23 per share. JWN’s bottom line easily beat analyst expectations of $1.02 per share.
Is This the Beginning of a JWN Rebound?
Year-to-date, shares of Nordstrom are up about 6% compared to the S&P 500’s 10.6% decline. Earnings estimates have been rising, and JWN is a Zacks Rank #1 (Strong Buy) right now.
Last quarter’s strong results prompted management to issue a very upbeat outlook for 2022. Nordstrom now expects revenue in the range of 5% to 7%; operating margin between 5.6% and 6%; and earnings between $3.15 and $3.50 per share.
Zacks’ estimates are in-line with the company’s guidance ranges. Five analysts revised their bottom-line estimate upwards in the last 60 days for the year, and the Zacks Consensus Estimate has jumped $1.26 to $3.30 per share. Earnings are expected to grow 200% compared to 2021, and sales could see growth of 5.7% to $15.6 billion for the year.
Looking ahead, it’s clear that Nordstrom has some great opportunities to improve all facets of its business, and its rebound will likely be buoyed by easing supply constraints and the reopening of offices near some of the retailer’s main flagship locations (Seattle, San Francisco, New York, Chicago, Toronto, and Vancouver).
The company also hopes to begin returning capital to shareholders in the first quarter, potentially in the form of dividend payments.
All of these factors, plus JWN’s enticing 7.3X 12-month price-to-earnings ratio, could mean the stock is ripe for a rebound.If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep JWN on your shortlist.
Founded back in 1998, PayPal has grown into one of the largest online payment solutions providers thanks to its strong product portfolio and two-sided platform that enables it to offer smooth and secure transaction facility to both customers and merchants.
Q4 Earnings Spook Investors
Last month, PayPal reported fourth-quarter fiscal 2021 results that ended up having a ripple effect across the entire payments industry.
The company’s headline numbers were actually pretty solid. Revenue was up 14% to $6.9 billion as total payments volume (TPV) grew 23% year-over-year to $339.5 billion, and non-GAAP earnings came to $1.11 per share, missing the consensus estimate by a penny.
The main problem, however, was PayPal’s guidance. The tech firm only expects revenue growth between 15% and 17% for 2022 compared to analysts’ expectations of about 18%, with adjusted EPS between flat and up 3%. Additionally, PayPal anticipates it will add 15 million to 20 million new accounts this year, which was far below the 53 million expected.
PayPal also said that it’s abandoning its long-term goal to add 750 million new monthly active users by 2025, and instead focus on creating more revenue from its existing user base, something many interpreted as the company foreseeing a growth slowdown.
PYPL shed about 25% to a new 52-week low after releasing its results, and fellow fintech stocks like Block, SoFi Technologies and Shopify all tumbled as well.
Bottom Line
PYPL is a Zacks Rank #5 (Strong Sell).
16 analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has dropped $0.47 to $4.69 per share. PYPL’s earnings are expected to grow only 2% for fiscal 2022, with revenue increasing 15.8% for the same period; both Zacks’ top and bottom-line estimates fall in-line with PayPal’s outlook.
Shares of PayPal have plummeted over 65% over the last six months as the stock got caught up in the broad-based tech and growth stock sell-off.
Adding to PYPL’s woes is bearishness from some on Wall Street.
Bank of America analyst Jason Kupferberg recently downgraded the fintech stock from a buy to a hold and cut his price target to $107 from $175, citing short-term headwinds. He sees management’s goal to increase revenue-per-user, rather than new customer growth, getting complicated due to the Russia-Ukraine conflict; almost a third of PayPal’s revenue was earned in Europe last year.
Kupferberg also believes 2022 will be a “transition year,” and told clients in a note he’s unclear how fast revenue could accelerate in the second half of the year, and warned shares could trade sideways as a result.
This warning, coupled with a tough trading environment for high-flying growth stocks, have led investors to reevaluate PYPL. After its recent slide, shares now trade at a 12-month forward earnings multiple of 21.4X.
While PYPL’s growth journey is looking bumpy right now, the stock’s post-earnings plunge could end up being a sold buying opportunity for long-term investors and those looking to add exposure to the digital payments space.
Additional content:
Is NVIDIA a Good Bet Amid Recent Sell-Off?
NVIDIA Corp. is one stock investors may consider adding to their portfolio to shrug off the impacts of the current highly volatile market environment and make some gains from its upside potential.
The year so far has been highly volatile for the U.S. stock market with the global economy going through a massive slowdown due to the macroeconomic and geopolitical environment. Year to date, the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 have plunged 8.4%, 15.3% and 10.3%, respectively.
The ongoing Russia-Ukraine war has further increased worries for investors who were already concerned about global economic recovery due to increasing crude oil prices, rising inflation and a hawkish policy adopted by the Fed.
The aforementioned global macroeconomic and geopolitical uncertainties are likely to continue weighing on investor sentiments, which could result in more volatility in the U.S. equity market.
Nonetheless, this volatility has also created buying opportunities for investors. In the current scenario, investors can look for stocks with strong fundamentals that can stay afloat and grow once the impact of the aforementioned global macroeconomic and geopolitical uncertainties cools off.
NVIDIA is one such stock in our opinion.
Why an Attractive Pick?
Share Price Decline & Reduced Valuation Multiple: Shares of NVIDIA have plunged 21.7% in the year-to-date (YTD) period, while the stock is down 33.6% from its 52-week high level of $346.47 attained on Nov 22, 2021, making the stock more affordable for investors. The stock trades at a one-year forward P/E of 45.1X compared with its five-year average of 82.02X.
Solid Rank & Growth Score: NVIDIA currently carries a Zacks Rank #1 (Strong Buy) and has a Growth Score of B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Of the 13 analysts covering the stock, 12 have raised their earnings estimates for fiscal 2023 over the past 30 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for the current fiscal year has moved 7.8% north.
Positive Earnings Surprise History: NVIDIA has an impressive earnings surprise history. The company outpaced estimates in the trailing four quarters, delivering an average earnings surprise of 7%.
Solid Growth Prospects: The Zacks Consensus Estimate of $5.56 for fiscal 2023 earnings suggests growth of 25.2% from the year-ago reported figure. Moreover, earnings are expected to register 14.7% growth in fiscal 2024 and reach $6.37 per share. Its projected long-term earnings per share growth rate is 16.8%.
Robust Fundamental Growth Drivers: NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit (GPU).
The graphic chip maker is benefiting from the coronavirus-induced work-from-home and learn-at-home wave. The company has been witnessing solid demand for GeForce desktop and notebook GPUs, which are boosting gaming revenues.
Moreover, a surge in Hyperscale demand is a tailwind for the company’s Data Center business. As more businesses shift to the cloud, the need for datacenters is increasing immensely. To cater to this huge demand, datacenter operators are expanding their operations, which is driving the demand for GPUs.
NVIDIA GPUs are also gaining rapid traction with the proliferation of artificial intelligence (AI). The increasing use of AI tools in datacenter, automotive, healthcare and manufacturing industries is expected to drive the demand for GPUs in the long haul.
Expansion of NVIDIA GeForce NOW is expected to drive user base. Further, the solid uptake of AI-based smart cockpit infotainment solutions is a boon.
The company is also working with more than 320 automakers, tier-one suppliers, automotive research institutions, HD mapping companies and start-ups to develop and deploy AI systems for self-driving vehicles.
Other Stocks to Consider
Some other stocks from the semiconductor industry worth considering amid the current market environment are Advanced Micro Devices and Micron Technology.
Advanced Micro Devices currently sports a Zacks Rank #1 and has a Growth Score of A. The Zacks Consensus Estimate for first-quarter 2022 earnings has been revised upward by 33.8% to 91 cents per share over the past 60 days. For 2022, earnings estimates have moved upward by 71 cents to $3.99 per share over the past 60 days.
Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 17%. Shares of AMD have declined 23.1% in the YTD period.
Micron currently carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for second-quarter fiscal 2022 earnings has remained unchanged over the past 30 days at $1.95 per share. For fiscal 2022, earnings estimates have moved upward by 4 cents to $8.95 per share in the past 30 days.
Micron’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 5%. MU stock has lost 14.8% of its market value in the year so far.
Just Released: Zacks' 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +25.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Nordstrom and PayPal have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 11, 2022 – Zacks Equity Research shares Nordstrom Inc. (JWN - Free Report) as the Bull of the Day and PayPal (PYPL - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. (NVDA - Free Report) , Advanced Micro Devices (AMD - Free Report) and Micron Technology (MU - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Headquartered in Seattle, Nordstrom Inc. is a leading fashion specialty retailer in the United States. The company offers an extensive selection of both branded and private-label merchandise, which are positioned in the upscale segment of the industry through its Nordstrom branded full-line stores; Nordstrom Rack stores; clearance stores under the Last Chance name; Trunk Club clubhouses; and Nordstrom Local.
Shares Skyrocket 38% After Q4 Earnings
Net sales climbed 23% year-over-year to $4.5 billion, and decreased just 1% compared to Q4 2019, showing investors that its top line has now almost completely recovered from the coronavirus pandemic.
Sales also rebounded 23% at Nordstrom Rack during the quarter. The retailer’s discount segment has been under a lot of pressure because of the supply chain crisis, which led to struggles to obtain enough inventory.
Digital sales fell a slight 1% year-over-year, but represented 44% of total sales during the all-important holiday quarter, as well as 42% of sales for the full fiscal year.
Notably, sales in Nordstrom’s home, active, designer, beauty, and kids categories showed the strongest growth compared with the fourth quarter of 2019, while its Southern Markets, including Southern California, was its best performing region.
Gross margin improved by five percentage points to 38%, driven partially by lower promotional activity. This resulted in an increase in operating income to $299 million and a sixfold rise in net earnings to $200 million, or $1.23 per share. JWN’s bottom line easily beat analyst expectations of $1.02 per share.
Is This the Beginning of a JWN Rebound?
Year-to-date, shares of Nordstrom are up about 6% compared to the S&P 500’s 10.6% decline. Earnings estimates have been rising, and JWN is a Zacks Rank #1 (Strong Buy) right now.
Last quarter’s strong results prompted management to issue a very upbeat outlook for 2022. Nordstrom now expects revenue in the range of 5% to 7%; operating margin between 5.6% and 6%; and earnings between $3.15 and $3.50 per share.
Zacks’ estimates are in-line with the company’s guidance ranges. Five analysts revised their bottom-line estimate upwards in the last 60 days for the year, and the Zacks Consensus Estimate has jumped $1.26 to $3.30 per share. Earnings are expected to grow 200% compared to 2021, and sales could see growth of 5.7% to $15.6 billion for the year.
Looking ahead, it’s clear that Nordstrom has some great opportunities to improve all facets of its business, and its rebound will likely be buoyed by easing supply constraints and the reopening of offices near some of the retailer’s main flagship locations (Seattle, San Francisco, New York, Chicago, Toronto, and Vancouver).
The company also hopes to begin returning capital to shareholders in the first quarter, potentially in the form of dividend payments.
All of these factors, plus JWN’s enticing 7.3X 12-month price-to-earnings ratio, could mean the stock is ripe for a rebound.If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep JWN on your shortlist.
Bear of the Day:
Founded back in 1998, PayPal has grown into one of the largest online payment solutions providers thanks to its strong product portfolio and two-sided platform that enables it to offer smooth and secure transaction facility to both customers and merchants.
Q4 Earnings Spook Investors
Last month, PayPal reported fourth-quarter fiscal 2021 results that ended up having a ripple effect across the entire payments industry.
The company’s headline numbers were actually pretty solid. Revenue was up 14% to $6.9 billion as total payments volume (TPV) grew 23% year-over-year to $339.5 billion, and non-GAAP earnings came to $1.11 per share, missing the consensus estimate by a penny.
The main problem, however, was PayPal’s guidance. The tech firm only expects revenue growth between 15% and 17% for 2022 compared to analysts’ expectations of about 18%, with adjusted EPS between flat and up 3%. Additionally, PayPal anticipates it will add 15 million to 20 million new accounts this year, which was far below the 53 million expected.
PayPal also said that it’s abandoning its long-term goal to add 750 million new monthly active users by 2025, and instead focus on creating more revenue from its existing user base, something many interpreted as the company foreseeing a growth slowdown.
PYPL shed about 25% to a new 52-week low after releasing its results, and fellow fintech stocks like Block, SoFi Technologies and Shopify all tumbled as well.
Bottom Line
PYPL is a Zacks Rank #5 (Strong Sell).
16 analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has dropped $0.47 to $4.69 per share. PYPL’s earnings are expected to grow only 2% for fiscal 2022, with revenue increasing 15.8% for the same period; both Zacks’ top and bottom-line estimates fall in-line with PayPal’s outlook.
Shares of PayPal have plummeted over 65% over the last six months as the stock got caught up in the broad-based tech and growth stock sell-off.
Adding to PYPL’s woes is bearishness from some on Wall Street.
Bank of America analyst Jason Kupferberg recently downgraded the fintech stock from a buy to a hold and cut his price target to $107 from $175, citing short-term headwinds. He sees management’s goal to increase revenue-per-user, rather than new customer growth, getting complicated due to the Russia-Ukraine conflict; almost a third of PayPal’s revenue was earned in Europe last year.
Kupferberg also believes 2022 will be a “transition year,” and told clients in a note he’s unclear how fast revenue could accelerate in the second half of the year, and warned shares could trade sideways as a result.
This warning, coupled with a tough trading environment for high-flying growth stocks, have led investors to reevaluate PYPL. After its recent slide, shares now trade at a 12-month forward earnings multiple of 21.4X.
While PYPL’s growth journey is looking bumpy right now, the stock’s post-earnings plunge could end up being a sold buying opportunity for long-term investors and those looking to add exposure to the digital payments space.
Additional content:
Is NVIDIA a Good Bet Amid Recent Sell-Off?
NVIDIA Corp. is one stock investors may consider adding to their portfolio to shrug off the impacts of the current highly volatile market environment and make some gains from its upside potential.
The year so far has been highly volatile for the U.S. stock market with the global economy going through a massive slowdown due to the macroeconomic and geopolitical environment. Year to date, the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 have plunged 8.4%, 15.3% and 10.3%, respectively.
The ongoing Russia-Ukraine war has further increased worries for investors who were already concerned about global economic recovery due to increasing crude oil prices, rising inflation and a hawkish policy adopted by the Fed.
The aforementioned global macroeconomic and geopolitical uncertainties are likely to continue weighing on investor sentiments, which could result in more volatility in the U.S. equity market.
Nonetheless, this volatility has also created buying opportunities for investors. In the current scenario, investors can look for stocks with strong fundamentals that can stay afloat and grow once the impact of the aforementioned global macroeconomic and geopolitical uncertainties cools off.
NVIDIA is one such stock in our opinion.
Why an Attractive Pick?
Share Price Decline & Reduced Valuation Multiple: Shares of NVIDIA have plunged 21.7% in the year-to-date (YTD) period, while the stock is down 33.6% from its 52-week high level of $346.47 attained on Nov 22, 2021, making the stock more affordable for investors. The stock trades at a one-year forward P/E of 45.1X compared with its five-year average of 82.02X.
Solid Rank & Growth Score: NVIDIA currently carries a Zacks Rank #1 (Strong Buy) and has a Growth Score of B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Of the 13 analysts covering the stock, 12 have raised their earnings estimates for fiscal 2023 over the past 30 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for the current fiscal year has moved 7.8% north.
Positive Earnings Surprise History: NVIDIA has an impressive earnings surprise history. The company outpaced estimates in the trailing four quarters, delivering an average earnings surprise of 7%.
Solid Growth Prospects: The Zacks Consensus Estimate of $5.56 for fiscal 2023 earnings suggests growth of 25.2% from the year-ago reported figure. Moreover, earnings are expected to register 14.7% growth in fiscal 2024 and reach $6.37 per share. Its projected long-term earnings per share growth rate is 16.8%.
Robust Fundamental Growth Drivers: NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit (GPU).
The graphic chip maker is benefiting from the coronavirus-induced work-from-home and learn-at-home wave. The company has been witnessing solid demand for GeForce desktop and notebook GPUs, which are boosting gaming revenues.
Moreover, a surge in Hyperscale demand is a tailwind for the company’s Data Center business. As more businesses shift to the cloud, the need for datacenters is increasing immensely. To cater to this huge demand, datacenter operators are expanding their operations, which is driving the demand for GPUs.
NVIDIA GPUs are also gaining rapid traction with the proliferation of artificial intelligence (AI). The increasing use of AI tools in datacenter, automotive, healthcare and manufacturing industries is expected to drive the demand for GPUs in the long haul.
Expansion of NVIDIA GeForce NOW is expected to drive user base. Further, the solid uptake of AI-based smart cockpit infotainment solutions is a boon.
The company is also working with more than 320 automakers, tier-one suppliers, automotive research institutions, HD mapping companies and start-ups to develop and deploy AI systems for self-driving vehicles.
Other Stocks to Consider
Some other stocks from the semiconductor industry worth considering amid the current market environment are Advanced Micro Devices and Micron Technology.
Advanced Micro Devices currently sports a Zacks Rank #1 and has a Growth Score of A. The Zacks Consensus Estimate for first-quarter 2022 earnings has been revised upward by 33.8% to 91 cents per share over the past 60 days. For 2022, earnings estimates have moved upward by 71 cents to $3.99 per share over the past 60 days.
Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 17%. Shares of AMD have declined 23.1% in the YTD period.
Micron currently carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for second-quarter fiscal 2022 earnings has remained unchanged over the past 30 days at $1.95 per share. For fiscal 2022, earnings estimates have moved upward by 4 cents to $8.95 per share in the past 30 days.
Micron’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 5%. MU stock has lost 14.8% of its market value in the year so far.
Just Released: Zacks' 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +25.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.