Macy's Vs Nordstrom Case Study

2847 Words 12 Pages
Register to read the introduction… Higher inventory turnover, combined with a higher ROA, ROE, and ROS signifies that Nordstrom is better at managing its expenses than Macy’s. In addition, it indicates that the company uses it assets more efficiently. The large difference in ROE between Macy’s and Nordstrom is the most significant metric identified to help indicate the future success of the two companies. Commonly known as the most important ratio for investors, the ROE of Nordstrom’s is over double the ROE of Macy’s in 2011, and quadruple the ROE of Macy’s in 2010. Nordstrom has a lower book-value per share compared to Macy’s and, combined with a higher stock price, indicates that Nordstrom will be more likely to have continued growth than Macy’s [3]. Bond investors awarded Nordstrom its lowest borrowing cost ever on a sale of 10-year bonds in October 2011. Fitch Ratings assigned a rating of 'A-' to Nordstrom’s $500 million 4% senior unsecured notes due October 15, 2021 [2]. Nordstrom is rated Baa1 by Moody’s Investors Service and A- at Standard & Poor’s, ranking it above rivals Neiman Marcus Group Inc., Saks Inc. and Macy’s Inc, [1]. As of May 2011, S&P Rating Services upgraded Macy’s from junk-bond status to a BBB-, the lowest investment grade rating …show more content…
However, based on the detailed ratio analysis of both Macy’s and Nordstrom, along with other empirical evidence and support, it is our recommendation to invest the full amount of $25,000 in Nordstrom, Inc. stock. The basis of our recommendation is supported through the examination of certain key financial metrics, along with supporting financial information and media findings, which we believe indicate strong potential for the long-term viability and growth of Nordstrom,

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