Nordstrom, Sony, Tim Hortons Look Interesting Following Earnings

 |  Includes: JWN, QSR, SNE
by: Wall St. Cheat Sheet

Nordstrom, Inc. (NYSE: JWN): Shares drop despite positive guidance.

Earnings: Q1 profits of $0.52/share vs. $0.55 consensus and $0.37 for Q1 last year (see transcript).

Revenue: Up 16% YOY to $2.09 billion.

“We’re in a much more normal rhythm when it comes to regular priced sales,” said Pete Nordstrom, the company’s president of merchandising.

Comment: JWN upped its FY earnings forecast from $2.35 – $2.55 to $2.50 – $2.65, but it wasn’t enough to keep shares from gapping down almost 4% on Friday in what was a generally weak environment. Profits were up more than 40% YOY and gross margins rose to 40.4% from 38.2%. The stock closed the week at $39.76 after hitting a high of $46.22 less than a month ago. Given the selling pressure that has taken hold of the market over the past couple weeks, there is definitely an argument to be made that JWN has been punished in excess of what it deserved, thus creating a potential bargain entry. I’d look to see that it can hold $38.65 before opening up a position.

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Sony Corp. (NYSE: SNE): Net losses narrowed, but shares still suffer.

Earnings: Net loss for the three months ended March 31 narrowed to 56.6 billion yen ($608 million), down from 165.1 billion yen a year earlier (see Q1 transcript).

Revenue: Up 12.5% YOY to 1.72 trillion yen.

Nobuyuki Oneda, Sony’s chief financial officer, was cited in newswire reports Thursday as saying that the company expects that there will be a turnaround in its games business and that wireless handset joint venture Sony Ericsson should swing to profit from a loss.

Comment: SNE’s Q was propped up by a combination of strong sales of imaging sensors, LCD panels and products related to its gaming business and a dedicated cost-cutting initiative that seems to be making an impact on the bottom line. The company is pinning much of its hopes on the launch of new 3D TVs and 3D-enabled games due out this summer. Shares are off about 25% since their March 23rd highs, so if you believe in the success of 3D-enabled retail technology you’re likely to get a more levered response out of a stock like SNE that has been beaten up pretty badly.

Tim Hortons Inc. (NYSE: THI): Donut shop gaps up on earnings beat, dividend announcement.

Earnings: C$0.45 vs. C$0.43 consensus and C$0.37 for the same period last year.

Revenue: Up approx. 5% YOY to C$583 million.

On a conference call with analysts, Don Schroeder, president and chief executive of Tim Hortons, said the first quarter was a strong start to the year, driven by menu innovations and promotional activity, as well as mild weather.

Comment: This was a very solid overall Q from THI. Same-store sales rose in both the U.S. and Canada and the board saw it fit to declare a $0.13 quarterly dividend. Shares rose nearly 5% on Thursday following the good news and no less than seven analyst upgrades, but gave back almost everything during Friday’s selloff. The analysts’ targets ranged from $37-$40, up to an 18% premium to Friday’s close of $33.96. If you can pick up shares on a successful test of the 50-day MA I’d consider it a buy.

Disclosure: No holdings in JWN, SNE, THI.