Which Company’s Stock is more Profitable? Nordstrom, Inc. (JWN) or Toll Brothers, Inc. (TOL)

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The shares of Nordstrom, Inc. (NYSE:JWN) and Toll Brothers, Inc. (NYSE:TOL) were among the active stocks of the last trading sessions. Nordstrom, Inc. (NYSE:JWN) soared to 2.75% closing at the price of $61.92 whereas the shares of Toll Brothers, Inc. (NYSE:TOL) soared 1.37% with the increase of 0.44 points closing at the price of $32.5. Nordstrom, Inc. has currently increase 25.17% in its stock over the period of 6-months while its rival Toll Brothers, Inc. subtracted -24.94% in the previous 6-months.

Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.

Returns and Profitability

Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.

The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Nordstrom, Inc. (NYSE:JWN) is 16.6% while the ROI of Toll Brothers, Inc. (NYSE:TOL) is 4.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, JWN’s EBITDA Margin is 7.04 whereas TOL’s is 9.95.

Both the profitability ratios suggest a mixed sentiment for Nordstrom, Inc. (NYSE:JWN) and Toll Brothers, Inc. (NYSE:TOL).

EPS & Surprise Factor

Nordstrom, Inc. (NYSE:JWN) reported $0.95/share EPS for the previous quarter where analysts were predicting an EPS to be $0.84/share Thus beating the analyst Estimates with a Surprise Factor of 13.1 Percent. While, Toll Brothers, Inc. (NYSE:TOL) reported EPS of $1.26/share in the last quarter. The analysts projected EPS of $1.03/share depicting a Surprise of 22.3 Percent.

Taking a look at Earnings per Share, Toll Brothers, Inc. tends to be beating the analyst estimates more than Nordstrom, Inc.. so TOL is more profitable than JWN.

Technical Analysis of Nordstrom, Inc. & Toll Brothers, Inc.

Moving average convergence divergence (MACD) shows that Nordstrom, Inc. (NYSE:JWN) is on a PRICE RELATIVITY trend While Toll Brothers, Inc. (NYSE:TOL) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Nordstrom, Inc. was in BULLISH territory and Toll Brothers, Inc. was in BEARISH territory.

JWN’s current statistics gauge that the stock candle is BULLISH with LOW volatility. While TOL’s candle is BULLISH with MEDIUM.

EPS Growth Rate: JWN’s 9.36% versus TOL’s 20.05%

Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Nordstrom, Inc. (NYSE:JWN) is predicted at 9.36% while Toll Brothers, Inc. (NYSE:TOL) stands at 20.05%. These numbers suggest that TOL is more suitable investment in terms of EPS growth rate.

Financial Risk and Liquidity Concerns

The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of JWN stands at 1.1 while TOL is at 0 whereas the debt ratio of the prior is 2.4 while the debt ratio of the later is 0.8.

The values of the both ratios suggest that JWN is more suitable investment when the liquidity and risk is the main concern.

Analyst Recommendations

While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 2.8 for JWN and 2.4 for TOL which means JWN has Hold rating whereas TOL has Hold rating.

Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for JWN is $59.53 which is -4.01% of its current price while TOL has price target of 47.27 which is 31.25% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

JWN currently has price to earning P/E ratio of 18.89 whereas TOL has 8.66 while the forward P/E ratio for the prior stands at 16.35 and for the later it depicts the value of 6.32.

The price to Book P/B for JWN is 9.12, Price to Sale is at 0.64 and for TOL these ratios stand at 1.09 and 0.72.