Dillard’s Inc. (DDS) has survived one of the worst retail recessions ever. It is trading at just 11x forward estimates, under the industry average of 14.4.
Dillard’s is one of the remaining department store brands that focuses on apparel, cosmetics and home furnishings. The company operates 299 Dillard’s and 12 clearance centers in 29 states.
June Same Store Sales Rise
In early July, Dillard’s reported June same stores sales rose 2% for the 5 weeks ending July 3. This was better than many analysts had expected.
Cosmetics underperformed in the period but sales trended higher in the Eastern region. Sales were below trend in the West.
Dillard’s Beat by 35% in the First Quarter
The retailers, especially the big department stores, have been struggling for years. But the severe retail recession in 2008 and 2009 pushed companies to make changes in strategies just to survive.
On May 14, Dillard’s reported first quarter results which again surprised on the Zacks Consensus Estimate for the fifth time in a row.
The turnaround in earnings surprises has been impressive and mirrors the turnaround in the stock.
Earnings per share were 69 cents compared to the Zacks Consensus of 51 cents.
Same store sales rose 2% as inventories declined 12% compared to the year ago period. The big department stores have really pared down their inventory.
The company also announced it was closing one underperforming store in Helena Montana in the second quarter.
Zacks Consensus Estimates Climb
Estimates were revised after the company’s big first quarter beat.
The fiscal 2010 Zacks Consensus rose 42% to $1.99 per share in the last 60 days. That’s a 173% increase in earnings compared to fiscal 2009 when the company made just 73 cents.
Analysts are more leery of fiscal 2011, however, as they anticipate a reduction in earnings of 5.3%. The fiscal 2011 Zacks Consensus stands at just $1.88 per share.
Dillard’s is expected to report second quarter results on Aug 16.
Value Fundamentals
In addition to Dillard’s low P/E, it also has a price-to-book ratio of just 0.7. The industry average is a much higher ratio of 1.9.
Its price-to-sales ratio is also just 0.3, while the industry is at 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.
