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Nordstrom Won't Go Private. Now What?

The narrow-moat retailer remains a best-in-class firm in the sector and can achieve low-single-digit average annual revenue growth over the next five years with an operating margin in the 6% range.

Our $53 fair value estimate has always been based on the intrinsic value of the company, independent of a deal. Therefore, we see no change to our valuation following this news. We still believe that Nordstrom is a best-in-class firm in the department store sector, possessing a narrow economic moat, given its brand strength. We remain confident that the company can achieve low-single-digit average annual revenue growth over the next five years while maintaining an operating margin in the 6% range as it capitalizes on its full- and off-price models, superior customer service, and curated product offering. Therefore, we still see shares as fairly valued.

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About the Author

Bridget Weishaar

Senior Equity Analyst

Bridget Weishaar is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers apparel retailers.

Before joining Morningstar in 2013, Weishaar spent five years as an equity analyst on the Internet research team at J.P. Morgan. She also worked as a retail analyst for Bear Stearns.

Weishaar holds a bachelor’s degree in science pre-professional studies from the University of Notre Dame and a master’s degree in business administration from The Wharton School of the University of Pennsylvania.

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