Head to Head Contrast: Nordstrom (JWN) and Ross Stores (ROST)

Nordstrom (NYSE: JWN) and Ross Stores (NASDAQ:ROST) are both retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, dividends and profitability.

Institutional & Insider Ownership

58.6% of Nordstrom shares are owned by institutional investors. Comparatively, 90.6% of Ross Stores shares are owned by institutional investors. 7.1% of Nordstrom shares are owned by insiders. Comparatively, 2.3% of Ross Stores shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Nordstrom and Ross Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nordstrom 2.86% 60.72% 6.20%
Ross Stores 9.64% 44.53% 22.75%

Volatility and Risk

Nordstrom has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500. Comparatively, Ross Stores has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Nordstrom and Ross Stores, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nordstrom 1 13 3 0 2.12
Ross Stores 0 6 18 0 2.75

Nordstrom presently has a consensus price target of $47.85, suggesting a potential downside of 1.95%. Ross Stores has a consensus price target of $82.62, suggesting a potential upside of 0.83%. Given Ross Stores’ stronger consensus rating and higher probable upside, analysts plainly believe Ross Stores is more favorable than Nordstrom.

Dividends

Nordstrom pays an annual dividend of $1.48 per share and has a dividend yield of 3.0%. Ross Stores pays an annual dividend of $0.90 per share and has a dividend yield of 1.1%. Nordstrom pays out 50.0% of its earnings in the form of a dividend. Ross Stores pays out 26.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Ross Stores has increased its dividend for 11 consecutive years.

Valuation & Earnings

This table compares Nordstrom and Ross Stores’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nordstrom $15.14 billion 0.54 $437.00 million $2.96 16.49
Ross Stores $14.13 billion 2.19 $1.36 billion $3.34 24.53

Ross Stores has lower revenue, but higher earnings than Nordstrom. Nordstrom is trading at a lower price-to-earnings ratio than Ross Stores, indicating that it is currently the more affordable of the two stocks.

Summary

Ross Stores beats Nordstrom on 13 of the 17 factors compared between the two stocks.

Nordstrom Company Profile

Nordstrom, Inc., a fashion retailer, provides apparel, shoes, cosmetics, and accessories for women, men, young adults, and children in the United States and Canada. The company operates in two segments, Retail and Credit. The Retail segment offers a range of brand name and private label merchandise through various channels, including Nordstrom branded full-line stores and online store at Nordstrom.com; Nordstrom Rack stores; Nordstromrack.com and HauteLook; Trunk Club clubhouses and TrunkClub.com; Jeffrey boutiques; and clearance stores that operate under the Last Chance name. The Credit segment provides access to various payment products and services, including Nordstrom-branded Visa credit cards, a Nordstrom-branded private label credit card, and a debit card. As of March 19, 2018, the company operated 363 stores in 40 states, including 117 Nordstrom full-line stores; 235 Nordstrom Rack stores; 2 Jeffrey boutiques; 2 clearance stores; 7 Trunk Club clubhouses; and 6 Nordstrom full-line stores in Canada. Nordstrom, Inc. was founded in 1901 and is headquartered in Seattle, Washington.

Ross Stores Company Profile

Ross Stores, Inc., together with its subsidiaries, operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's DISCOUNTS brands in the United States. It primarily offers apparel, accessories, footwear, and home fashions. The company's Ross Dress for Less stores sell its products at department and specialty stores primarily to middle income households; and dd's DISCOUNTS stores sell its products at department and discount stores regular prices to customers from households with moderate income. As of March 12, 2018, it operated 1,432 locations in 38 states, the District of Columbia, and Guam; and 219 dd's DISCOUNTS stores in 17 states. The company was founded in 1982 and is headquartered in Dublin, California.

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