Dillard's Inc. - Value

The department store isn't dead yet. Just ask Dillard's Inc. (DDS) which is looking forward to the holiday season after it just surprised on the Zacks Consensus for the 6th time in the last 7 quarters.

Granted, 2007 and 2008 were brutal years for the retailers and Dillard's missed on estimates every quarter as the stock slid.

But starting in early 2009, Dillard's, which operates 296 Dillard's and 14 clearance centers in 29 states as well as a website at www.dillards.com, turned it around.

Dillard's Beat By 37% in the Third Quarter

The third quarter results, reported on Nov 12, were yet another big surprise on the Zacks Consensus.

Earnings per share were 22 cents compared to the Zacks Consensus of 16 cents. It is also nearly double the 11 cents earned a year ago.

Comparable store sales rose 1% over the third quarter of 2009 but total merchandise sales were basically unchanged at $1.321 billion from $1.316 billion in the third quarter of last year.

Inventories were under tight management, as they declined in comparable stores by 2% year over year. The continued inventory management meant fewer markdowns compared to last year.

Zacks Consensus Estimates Rise

The company did not provide fourth quarter EPS guidance but analysts have been revising estimates higher based on the solid third quarter results.

The fiscal 2010 Zacks Consensus Estimate has jumped 16 cents to $2.13 per share in the last 7 days. This is earnings growth of 191%.

Growth is expected to slow in fiscal 2011 to just 4%. But 2 estimates have risen in the last week, pushing the Zacks Consensus up to $2.21 from $1.88 per share.

Dillard's Has Value Fundamentals

Dillard's is not an expensive stock. It is trading with a forward P/E of 14, which is under its peers at 16.5x.

Its other value characteristics, price-to-book and price-to-sales, both fall within value parameters and beat its peers. Its P/B ratio is just 0.9, whereas the peers are at 1.7 and its P/S ratio is at 0.3 compared to 0.4 for its peers.

As an added bonus for investors, it also pays a dividend currently yielding 0.5%.

Dillard's is a Zacks #1 Rank (strong buy) stock.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.


 
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