Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

In this article, I will feature one apparel store that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Nordstrom (NYSE:JWN), a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Nordstrom's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Tricia SmithEVPOct 16,439Yes2,599 shares + 7,240 options39.6%
Margaret MyersEVPSep 188,670No23,608 shares26.9%
Delena SundayEVPSep 1630,576Yes40,262 shares + 14,215 options35.9%

There have been 45,685 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Nordstrom's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
October 20136,4390
September 201339,2460
August 201300
July 2013129,2610
June 201349,6030
May 2013191,4940
April 201300
March 201324,9650
February 201300
January 201300

There have been 441,008 shares sold and there have been zero shares purchased by insiders this year.

Financials

Nordstrom reported the second-quarter financial results on August 15 with the following highlights:

Revenue$3.1 billion
Net income$184 million
Cash$1.1 billion
Debt$3.1 billion

Outlook

On August 15 Nordstrom reduced its full-year earnings per diluted share outlook to $3.60 to $3.70 compared to its prior outlook of $3.65 to $3.80. This reflects full-year same-store sales expectations of 2 to 3 percent compared to its prior outlook of 3 to 5 percent.

(click to enlarge)

Competition

Nordstrom's competitors include Kohl's (NYSE:KSS), Macy's (NYSE:M) and Dillard's (NYSE:DDS). Here is a table comparing these companies.

CompanyDDSJWNKSSM
Market Cap:3.51B11.08B11.17B16.04B
Employees:27,74061,00030,000175,700
Qtrly Rev Growth (yoy):-0.010.060.02-0.01
Revenue:6.75B12.46B19.32B27.88B
Gross Margin:0.370.370.360.40
EBITDA:832.73M1.80B2.74B3.73B
Operating Margin:0.080.110.100.10
Net Income:363.66M759.00M970.00M1.37B
EPS:7.693.794.283.46
P/E:9.9815.0112.0212.34
PEG (5 yr expected):1.911.391.880.92
P/S:0.520.890.580.58

Nordstrom has the highest P/S ratio among these four companies, which could explain some of the insider selling.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
M7,1251,569,559
KSS5,068582,764
DDS058,464

Only Nordstrom has seen intensive insider selling during the past 30 days.

Conclusion

There have been three different insiders selling Nordstrom and there have not been any insiders buying Nordstrom during the past 30 days. All three of these insiders decreased their holdings by more than 10%. Nordstrom has an insider ownership of 3.60%.

Nordstrom is trading at a P/E ratio of 15.01 and a forward P/E ratio of 13.79. Nordstrom has a book value of $10.39 per share and the stock has a dividend yield of 2.11%.

Nordstrom has a $48 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $48 price target. I would place a stop loss at $63, which is the all-time high. The two main reasons for the proposed short entry are bearish Point and Figure chart and the intensive insider selling activity.

Source: Insiders Are Selling Nordstrom