Nordstrom (JWN) Q3 Earnings: Will The Stock Disappoint?

Nordstrom Inc. (NYSE:JWN) is scheduled to release third-quarter fiscal 2016 results on Nov 10, after the closing bell. The big question facing investors is, whether this leading fashion specialty retailer will be able to deliver a positive earnings surprise in the quarter to be reported. In the last quarter, the company posted a positive earnings surprise of 21.8%. However, it underperformed the Zacks Consensus Estimate by an average of 11.1% in the trailing four quarters. Let’s see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Nordstrom is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1, 2 or 3 and a positive Earnings ESP for this to happen. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Nordstrom has an Earnings ESP of +1.89% as the Most Accurate estimate stands at 54 cents, while the Zacks Consensus Estimate is pegged at 53 cents. However, the company carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing this Quarter

Nordstrom’s presence in the consumer-driven apparel space exposes it to the risks of changing tastes, preferences and spending behavior of consumers. In fact, the company has missed sales estimates for four straight quarters now, with earnings declining year over year for over a year and a half, hurt by challenging economic conditions. Also, it faces stiff competition from other players that poses a threat to margins.

However, Nordstrom’s strategic investments should help it deliver sustainable growth over the long term. Additionally, the company’s strong brand image, amendments to its operating model to generate cost savings, and continuous store expansion remain driving factors. Further, estimates have been stable lately ahead of the company's third-quarter earnings release.

Stocks Poised to Beat Earnings Estimates

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

Hibbett Sports, Inc. (NASDAQ:HIBB) has an Earnings ESP of +4.00% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Urban Outfitters Inc. (NASDAQ:URBN) has an Earnings ESP of +4.55% and a Zacks Rank #3 (Hold).

J. C. Penney Company, Inc. (NYSE:JCP) has an Earnings ESP of +15.00% and a Zacks Rank #3.

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