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Nordstrom (JWN) to Report Q3 Earnings: What's in the Offing?

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Nordstrom, Inc. (JWN - Free Report) is slated to report third-quarter fiscal 2018 results on Nov 15, after the closing bell.

The company boasts an impressive earnings surprise history, marking eighth beat in the last nine quarters. Further, it delivered an average earnings beat of 9.8% in the trailing four quarters.

Nordstrom, Inc. Price, Consensus and EPS Surprise

Nordstrom, Inc. Price, Consensus and EPS Surprise | Nordstrom, Inc. Quote

The Zacks Consensus Estimate of 63 cents for third-quarter earnings remained stable over the past 30 days, reflecting a decline of nearly 6% year over year.

Let’s see how things are shaping up prior to this earnings announcement.

Factors at Play

Nordstrom is benefiting from its solid strategic endeavors, including robust omni-channel capabilities and efforts to keep pace with the evolving retail trends. Its store expansion efforts to gain market share and generate higher sales are also commendable. Further, Nordstrom remains well on track with enhancing its presence in Canada. Currently, it is smoothly progressing with the customer-based strategy and is poised well for growth.

With regard to cost savings, the company plans to strike a balance between growth in sales and expenses. This apart, management is making amendments to its operating model in response to the constant slowdown in mall traffic resulting from customers’ shift to online shopping. Nordstrom is also focused on advancing in the technology space by boosting e-commerce and digital networks, and improving its supply-chain channels and marketing efforts. All these initiatives are likely to drive the company’s top line in the impending quarter.

Notably, the Zacks Consensus Estimate for third-quarter revenues stands at $3.68 billion, up nearly 1.5% from third-quarter fiscal 2017 level.

For fiscal 2018, management raised earnings per share and sales guidance, following impressive results in the first half of the year.

 



Shares of this leading fashion retailer have rallied 29.6% in the past three months against the industry’s 1.9% decline.

While Nordstrom’s growth strategy bodes well for the long term, investments related to occupancy, technology, supply chain and marketing expenses have resulted in increased near-term costs. These higher costs have been weighing on the company’s margins for the past few quarters and might dent its overall profitability in the quarters ahead.

Zacks Model

Our proven model conclusively shows that Nordstrom is likely to beat earnings estimates in the fiscal third quarter. This is because it has the right combination of the two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Nordstrom has an Earnings ESP of +16.90% and a Zacks Rank #2, which make us confident of an earnings beat.

Other Stocks With Favorable Combination

Here are some other companies that you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat:

American Eagle Outfitters, Inc. (AEO - Free Report) has an Earnings ESP of +2.95% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

L Brands, Inc. (LB - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank of 2.

PVH Corp. (PVH - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank #3.

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