Analyzing Nordstrom (JWN) and Overstock.com (OSTK)

Nordstrom (NYSE: JWN) and Overstock.com (NASDAQ:OSTK) are both retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Volatility and Risk

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Nordstrom has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500. Comparatively, Overstock.com has a beta of 1.57, suggesting that its stock price is 57% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Nordstrom and Overstock.com, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nordstrom 1 13 5 0 2.21
Overstock.com 0 0 2 0 3.00

Nordstrom presently has a consensus price target of $49.31, indicating a potential upside of 6.37%. Overstock.com has a consensus price target of $62.50, indicating a potential upside of 38.27%. Given Overstock.com’s stronger consensus rating and higher probable upside, analysts clearly believe Overstock.com is more favorable than Nordstrom.

Dividends

Nordstrom pays an annual dividend of $1.48 per share and has a dividend yield of 3.2%. Overstock.com does not pay a dividend. Nordstrom pays out 57.4% of its earnings in the form of a dividend.

Insider and Institutional Ownership

58.8% of Nordstrom shares are owned by institutional investors. Comparatively, 69.1% of Overstock.com shares are owned by institutional investors. 7.3% of Nordstrom shares are owned by insiders. Comparatively, 28.9% of Overstock.com shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Nordstrom and Overstock.com’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nordstrom $15.14 billion 0.51 $437.00 million $2.58 17.97
Overstock.com $1.74 billion 0.76 -$109.87 million ($4.27) -10.59

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

Profitability

This table compares Nordstrom and Overstock.com’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nordstrom 2.86% 60.72% 6.20%
Overstock.com -6.30% -49.57% -19.40%

Summary

Nordstrom beats Overstock.com on 9 of the 16 factors compared between the two stocks.

About Nordstrom

Nordstrom, Inc. is a fashion specialty retailer in the United States. The Company’s segments include Retail and Credit. As of March 20, 2017, the Company operated 344 the United States stores located in 40 states as well as an e-commerce business. The Company also offers its customers a variety of payment products and services, including credit and debit cards. As of March 20, 2017, the Retail segment included its 117 Nordstrom-branded full-line stores in the United States and Nordstrom.com, 216 off-price Nordstrom Rack stores, five Canada full-line stores, Nordstromrack.com/HauteLook, seven Trunk Club clubhouses and TrunkClub.com, two Jeffrey boutiques and two clearance stores that operate under the name Last Chance. The Company, through Credit segment, allows its customers to access a range of payment products and services, including a Nordstrom-branded private label card, approximately two Nordstrom-branded Visa credit cards and a debit card for Nordstrom purchases.

About Overstock.com

Overstock.com, Inc. is an online retailer and incubator of blockchain technology. Through its online retail business, the Company offers a range of price-competitive brand name, non-brand name and closeout products, including furniture, home decor, bedding and bath, housewares, jewelry and watches, apparel and designer accessories, health and beauty products, electronics and computers, and sporting goods. It operates Retail and Medici businesses. Its Retail business consists of its Direct and Partner segments. Its Other segment consists of Medici. The Company also sells various books, magazines, compact discs (CDs), digital versatile discs (DVDs) and video games. The Company sells these products and services through its Internet Websites located at www.overstock.com, www.o.co and www.o.biz. The Company’s other offerings include Worldstock Fair Trade, Main Street Revolution, Farmers Market, Pet Adoptions, Insurance and Supplier Oasis.

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