Is Nordstrom the Best Discounted Retail Stock to Buy at 11.3X P/E?

Valuation - Nordstrom, Inc. (JWN) is trading at a forward 12-month price-to-earnings ratio of 11.32, which is below the industry average of 16.46 and the Retail-Wholesale sector's average of 23.05, indicating it is undervalued relative to its peers [1] - The current stock price is $24.37, reflecting a 2.5$24.99 [3] Price Performance - JWN shares have increased by 31% over the past year, outperforming the Zacks Retail - Apparel and Shoes industry's decline of 3.1% and the S&P 500 index's increase of 11.3% [3] - The stock is trading above its 200-day and 50-day moving averages of $23.24 and$21.66, respectively, indicating a sustained upward trend [3] Growth Drivers - Nordstrom is focusing on growth at both the Nordstrom banner and Nordstrom Rack, optimizing operations and enhancing customer experience [5] - The company is committed to improving inventory management and refining its product mix to boost productivity [5] - The Nordstrom Rack banner is showing positive results through increased brand penetration and targeted improvements [6] Strategic Initiatives - The "Closer to You" strategy includes store expansion and localized offerings, enhancing accessibility and customer loyalty [6][8] - Nordstrom is enhancing its digital capabilities, with digital sales representing 38% of net sales in the fourth quarter of fiscal 2024 [11] - The company is leveraging technology to streamline operations and improve inventory management, focusing on faster delivery and personalized services [12] Financial Performance - In the fourth quarter of fiscal 2024, Nordstrom experienced a slight decline in total revenues but saw improvements in net sales and comparable sales growth [9] - Gross profit margin expanded due to improved merchandise margins, better inventory management, and reduced markdowns [10] - Adjusted SG&A expenses declined as a percentage of net sales, despite higher labor costs, contributing to strong year-over-year growth in adjusted EBIT [10] Earnings Estimates - The Zacks Consensus Estimate for earnings per share has seen upward revisions, with current estimates for the fiscal year increased by 5.5% to $2.13 and by 15.7$2.29 for the next fiscal year [13] Final Thoughts - JWN stock is appealing to investors due to its undervaluation relative to industry peers and strategic initiatives supporting long-term growth [15] - The company's strong execution and market positioning demonstrate resilience and growth potential, currently holding a Zacks Rank 1 (Strong Buy) [15]