Head to Head Review: Nordstrom (JWN) & Stage Stores (SSI)

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

Profitability

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

Net Margins Return on Equity Return on Assets
Nordstrom 2.96% 58.92% 6.30%
Stage Stores -2.34% -6.61% -2.64%

Analyst Recommendations

This is a summary of recent ratings for Nordstrom and Stage Stores, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nordstrom 1 11 3 0 2.13
Stage Stores 1 0 0 0 1.00

Nordstrom presently has a consensus price target of $48.33, indicating a potential upside of 6.55%. Stage Stores has a consensus price target of $1.00, indicating a potential downside of 68.05%. Given Nordstrom’s stronger consensus rating and higher possible upside, research analysts plainly believe Nordstrom is more favorable than Stage Stores.

Risk & Volatility

Nordstrom has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, Stage Stores has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Dividends

Nordstrom pays an annual dividend of $1.48 per share and has a dividend yield of 3.3%. Stage Stores pays an annual dividend of $0.20 per share and has a dividend yield of 6.4%. Nordstrom pays out 50.0% of its earnings in the form of a dividend. Stage Stores pays out -23.5% 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. Stage Stores is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

59.3% of Nordstrom shares are owned by institutional investors. Comparatively, 52.7% of Stage Stores shares are owned by institutional investors. 7.1% of Nordstrom shares are owned by company insiders. Comparatively, 9.4% of Stage Stores shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Nordstrom and Stage 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 0.50 $437.00 million $2.96 15.32
Stage Stores $1.59 billion 0.05 -$37.32 million ($0.85) -3.68

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

Summary

Nordstrom beats Stage Stores on 11 of the 15 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 April 12, 2018, the company operated 370 stores in 40 states, including 122 full-line stores; 236 Nordstrom Rack stores; 2 Jeffrey boutiques; 2 clearance stores; 7 Trunk Club clubhouses; and Nordstrom Local service concept. Nordstrom, Inc. was founded in 1901 and is headquartered in Seattle, Washington.

Stage Stores Company Profile

Stage Stores, Inc. operates specialty department stores primarily in small and mid-sized towns and communities in the United States. Its merchandise portfolio comprises moderately priced brand name and private label apparel, accessories, cosmetics, footwear, and home goods. The company also offers merchandise direct-to-consumer through its e-commerce Website and send program. As of September 27, 2017, it operated 792 specialty department stores in 42 states under the BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES, and STAGE names; 58 GORDMANS off-price stores; and stage.com, an e-commerce Website. The company was founded in 1988 and is headquartered in Houston, Texas.

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