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Nordstrom (JWN) Q1 Earnings: Is a Disappointment in Store?

Nordstrom Inc. JWN is slated to report first-quarter fiscal 2016 results on May 12. Last quarter, the company had delivered a negative earnings surprise of 4.1%. In fact, the company has underperformed the Zacks Consensus Estimate by an average of 6.9% over the trailing four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

After a dismal fourth quarter, Nordstrom issued a bleak outlook for fiscal 2016. Management stated that it expects earnings to nosedive approximately 30% in the first half of fiscal 2016 owing to the impact of the sale of credit receivables in Oct 2015, the unfavorable shift of the Anniversary sale event and costs related to various growth initiatives. Considering such a subdued outlook, we are not very optimistic about the company’s first-quarter results. However, Nordstrom’s customer strategy, strong brand image and continuous expansion endeavors bode well.

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 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: Earnings ESP for Nordstrom is currently pegged at -2.22%. This is because the Most Accurate estimate of 44 cents stands below the Zacks Consensus Estimate of 45 cents.

Zacks Rank: Nordstrom currently has 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.

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:

ULTA Salon, Cosmetics & Fragrance, Inc. ULTA, scheduled to release earnings on May 26, 2016, has an Earnings ESP of +0.78% and a Zacks Rank #1 (Strong Buy).

The TJX Companies, Inc. TJX, scheduled to release earnings on May 17, 2016, has an Earnings ESP of +1.43% and a Zacks Rank #2 (Buy).

L Brands, Inc. LB, slated to release earnings on May 18, 2016, has an Earnings ESP of +1.75% and a Zacks Rank #3 (Hold).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
NORDSTROM INC (JWN): Free Stock Analysis Report
 
TJX COS INC NEW (TJX): Free Stock Analysis Report
 
ULTA SALON COSM (ULTA): Free Stock Analysis Report
 
L BRANDS INC (LB): Free Stock Analysis Report
 
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