Hey did you know that Nordstrom’s stock is a dividend payer? I was recently asked what I thought about Nordstrom’s stock and if it’s a good value right now. Given the fact that the market has been frothy aka yuppie word for high, I will try to give it a fair valuation. The company is in the Apparel and accessories sector & industry and was founded in 1901. They operate about 300 retail stores mostly in US, (about 6 in Canada) and have several websites under different brand names. Even though I assume most of the products from those websites will come from Nordstrom’s inventories. The websites are Hautelook, Trunkclub, and Nordstromrack.com. I assume they will have continued success with those websites as the popularity of online shopping increases. Nordstrom’s is expanding faster into the Nordstrom’s Rack name brand, and my guess is because they desire to offer cheaper outlet based priced products and gain market share in that space.

Now to discuss the important stock analysis for Nordstrom’s stock JWN, who has 28 years of dividend paying history. It is currently trading at $72 dollars a share with a PE ratio of about 19% that is right on point with the market average for most US equities. It has a decent market cap of about $13 billion dollars, but only a net profit of about $720 million. These numbers were reported for the 2014 fiscal year.   The dividend yield is about 2% right now, and the stock has experienced a 5 year growth rate of about 13% which is really good if you ask me. The company is paying about $1.48 cents a share for dividends with annual revenue earnings of $3.75 per share. Going back a few years and reviewing the company’s revenue trend up to date, clearly shows the company steadily increasing revenue every quarter.

The price of the stock has fluctuated from $60 dollars in 2006, down to $20 in 2008 and climbed back up to $80 as of 2015. I think a fair valuation for the stock is and will be based on what the company does as far as free cash flow. Another thing I found about this business is that it is very highly dependent on the Christmas season for the business to achieve profitability for the entire year. Cyclical businesses like that need to do more to even out the numbers throughout the year as to avoid cash flow risk.

From the numbers I saw, JWN is a good company and it is expanding into good markets. If they continue to pursue the rack, hautelook, trunkclub, and last chance brands they will have more business success going into the future. The analysts predict the company will aim for 14 billion in sales in 2016. Because of the increase in sales, they need to aim for at least 1 billion in net profit for 2016 and show better numbers on the free cash flow ratio.

Furthermore I never heard of it being mentioned on the dividend bloggers twitter feeds, but does that mean this stock should not be considered valuable? It is not popular on the PF blogging radar and maybe it is because the yield was on the low end. In any event the stock priced in the $55-65 dollar range is a good value and I would pick up a few shares at those levels when the time is right.

If you shop here for your evening gowns, would it make sense to invest here as well for some future dividend cash flow?

As far as Dividata goes it has an overall dividend stock rating of 4%.

Would you invest in Nordstrom’s stock?

Rich Uncle EL