Nordstrom Weakness Not What it Seems: Analyst

On Thursday, investors weren’t sure what to make of Nordstrom after the luxury retailer reported a higher than expected quarterly profit, but also gave a profit forecast that missed Wall Street's expectations and said its gross profit margin would dip this year.

Shares slipped 2.7 percent to $50.75 in afterhours trading.

Before you make any rash decisions, Baird analyst Erica Maschmeyer says the weakness may be deceiving.

She tells us that investors are too focused on the fact that Nordstrom expects to spend between $480 million and $520 million on capital expenditures, up from $430 million last year.

What they don't understand, Maschmeyer says, is that most of the increase is going to strengthening its e-commerce capabilities and “that’s a positive reason.” In fact she says 2012 is a big investment year for the company with Nordstrom also putting money into IT and people.

She says historically these kinds of investment are good for investors. “It should generate a nice return on invested capital.”

And she thinks the way to trade is long. "At 15 times, the stock is still a value," she says. "Nordstrom remains one of the highest quality retailers in the business."

Trader Guy Adami just doesn’t buy it – at least in the near term. He says, “at 15 times earnings – given the run – I’d look elsewhere – Macy’s at 10 times earnings seems like a better way to play retail.”

Looking at Nordstrom’s numbers more closely, Nordstrom's net income for the quarter, ended on Jan. 28 edged up to $236 million, or $1.11 per share, from $232 million, or $1.04 a year earlier. That was above the $1.09 per share analysts were expecting, according to Thomson Reuters I/B/E/S.

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Trader disclosure: On Feb 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Grasso is long ASTM; Grasso is long S; Grasso is long XLU; Grasso is long AVAV; Grasso is long BA; Grasso is long D; Grasso is long DIO; Grasso is long LIT; Grasso is long MHY; Grasso is long NUAN; Grasso is long MO; Grasso is long PFE; Grasso is long PRST; Seymour is long BAC; Seymour is long INTC; Adami owns C; Adami owns GS; Adami owns MSFT; Adami owns AGU; Adami owns NUE; Adami owns INTC; Adami owns BTU

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