Nordstrom Hits 52-Wk High on New Share Buyback Program - Analyst Blog

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Shares of Nordstrom Inc. ( JWN ) touched a new 52-week high during yesterday's trading session after the high-end fashion retailer announced a new share repurchase program. The authorization shows Nordstrom's financial strength as reflected in the company recently posted better-than-expected second-quarter fiscal 2014 results.

Nordstrom's board of directors approved a new share repurchase program to buyback shares to the tune of $1 billion through Mar 1, 2016. This new authorization adds to the company's previous share repurchase authorization that expires on Mar 1, 2015 and still has an amount of $323 million remaining under it.

This brings the company's total share repurchase authorization to $1.323 billion. The company plans to fund the newly announced share buybacks by using the available cash on hand.

The strength of Nordstrom's business model is reflected in its strong cash generation capabilities and its commitment to return value to its shareholders. We believe that continued share buybacks will increase investor confidence on the stock.

Nordstrom's strong balance sheet and cash flows provide financial flexibility in matters of shareholder friendly moves as well as store and online business expansions. During the first two quarters of fiscal 2014, it shelled out $326 million on share repurchases and $125 million on cash dividends. Cash and cash equivalents stood at $772 million at the end of second quarter. We remain encouraged by Nordstrom's strong cash position and its ability to service its long-term debts.

Other companies that recently announced share repurchase programs include Varian Medical Systems, Inc. ( VAR ), Briggs & Stratton Corp. ( BGG ) and Cardinal Health, Inc. ( CAH ).

We believe that dividend hikes and share repurchases not only enhance shareholder return, but raise the market value of a stock. Through dividend raises, companies bolster investor confidence, persuading them to either buy or hold the scrip instead of selling these. Looking ahead, the company remains confident of its growth potential, suggesting enhanced value for shareholders via dividend payout as well as share buybacks.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Stocks

Referenced Stocks: VAR , CAH , JWN , BGG

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