Will Nordstrom (JWN) Deliver a Surprise this Earnings Season? - Analyst Blog

Nordstrom Inc. ( JWN ), a leading fashion retailer, is slated to report its second-quarter 2014 earnings on Aug 14, after the closing bell. In the previous quarter, Nordstrom recorded a positive earnings surprise of 7.5%. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

Nordstrom's first-quarter earnings were driven by its customer strategy, which continued to bear fruit, reflecting growth across channels along with efficient inventory and expense management. The year-over-year increase in top line was primarily led by strong comparable store sales, along with new store openings and robust online retail performance. Going forward, the company intends to remain committed towards strengthening its network with the aim of driving top-line growth. However, management prefers to remain cautious, given the challenging promotional environment.

Earnings Whispers

Our proven model does not conclusively show that Nordstrom is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below:

Zacks ESP : The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at +5.32%. This is because the Most Accurate estimate of 99 cents per share is above the Zacks Consensus Estimate of 94 cents.

Zacks Rank : Nordstrom carries a Zacks Rank #4 (Sell), which lowers the predictive power of ESP.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

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

GameStop Corp. ( GME ), Earnings ESP of +26.32% and a Zacks Rank #3 (Hold).

Abercrombie & Fitch Co. ( ANF ), Earnings ESP of +20.00% and a Zacks Rank #3.

Macy's, Inc. ( M ), Earnings ESP of +1.16% and a Zacks Rank #3.

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NORDSTROM INC (JWN): Free Stock Analysis Report

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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 Nasdaq, Inc.

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

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