Sears Holdings Corporation (NASDAQ: SHLD) and Nordstrom (NYSE:JWN) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, earnings, analyst recommendations and profitability.

Profitability

This table compares Sears Holdings Corporation and Nordstrom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sears Holdings Corporation -7.16% N/A -9.19%
Nordstrom 2.44% 71.19% 7.26%

Dividends

Nordstrom pays an annual dividend of $1.48 per share and has a dividend yield of 3.3%. Sears Holdings Corporation does not pay a dividend. Nordstrom pays out 70.1% of its earnings in the form of a dividend.

Insider & Institutional Ownership

65.5% of Sears Holdings Corporation shares are held by institutional investors. Comparatively, 64.4% of Nordstrom shares are held by institutional investors. 89.0% of Sears Holdings Corporation shares are held by company insiders. Comparatively, 7.0% of Nordstrom shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Sears Holdings Corporation and Nordstrom’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sears Holdings Corporation $21.05 billion 0.05 -$1.07 billion ($14.08) -0.63
Nordstrom $15.00 billion 0.50 $1.69 billion $2.11 21.28

Nordstrom has higher revenue, but lower earnings than Sears Holdings Corporation. Sears Holdings Corporation is trading at a lower price-to-earnings ratio than Nordstrom, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Sears Holdings Corporation has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500. Comparatively, Nordstrom has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Sears Holdings Corporation and Nordstrom, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sears Holdings Corporation 1 0 0 0 1.00
Nordstrom 4 14 7 0 2.12

Sears Holdings Corporation presently has a consensus price target of $4.00, suggesting a potential downside of 54.95%. Nordstrom has a consensus price target of $47.41, suggesting a potential upside of 5.59%. Given Nordstrom’s stronger consensus rating and higher probable upside, analysts plainly believe Nordstrom is more favorable than Sears Holdings Corporation.

Summary

Nordstrom beats Sears Holdings Corporation on 10 of the 15 factors compared between the two stocks.

About Sears Holdings Corporation

Sears Holdings Corporation is an integrated retailer. The Company is the parent company of Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. (Sears). The Company’s segments are Kmart and Sears Domestic. It also offers Shop Your Way, a member-based social shopping platform that offers rewards and personalized services. The Company is the home appliance retailer, as well as offers tools, lawn and garden, fitness equipment, automotive repair and maintenance. Its brands include Kenmore, Craftsman and DieHard. It also maintains a range of apparel and home offering, including labels, such as Jaclyn Smith, Joe Boxer, Route 66, Cannon, Ty Pennington Style and Levi’s and also offers Lands’ End merchandise in some of its Full-line stores. As of January 28, 2017, it is also a provider of home services, with over four million service and installation calls made annually. As of January 28, 2017, it operated a network of stores with 1,430 full-line and specialty retail stores.

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.

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