Nordstrom, Inc.
Thesis
Nordstrom is undervalued compared to its peers, trading at a six-turn valuation discount despite better performance and growth opportunities in the off-price segment through Nordstrom Rack. The company is expected to generate strong cash flows and has a favorable risk-reward profile, with a target price of $94 representing a 46% upside.
Did it work?
The long thesis called for a 46% upside to a $94 target based on a valuation discount and strong cash flows, but after 93 months the stock is down 93.1% — a catastrophic loss in the opposite direction of the thesis. Far from closing the gap to peers, Nordstrom's equity value was almost entirely destroyed over the period, decisively invalidating the undervaluation and risk-reward argument. With nearly eight years elapsed and the return dramatically negative, the thesis clearly failed.