Dillard's stock declines amid market weakness
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 18 2024
0mins
Should l Buy DDS?
Dillard's Inc (DDS) experienced a price drop of 5.02% during regular trading, hitting a 5-day low. This decline comes as the broader market shows signs of weakness, with the Nasdaq-100 down 0.25% and the S&P 500 down 0.38%.
The stock's movement reflects sector rotation amid the overall market decline, as investors reassess their positions in retail amidst mixed economic signals. The delayed U.S. jobs report and upcoming economic data are contributing to a cautious market sentiment.
Despite the recent downturn, Dillard's has shown strong performance over the past five years, with a significant increase in stock value driven by profitability and strategic initiatives. Investors remain optimistic about the company's future, although current market conditions are impacting short-term performance.
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Analyst Views on DDS
Wall Street analysts forecast DDS stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for DDS is 492.00 USD with a low forecast of 460.00 USD and a high forecast of 524.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
2 Analyst Rating
0 Buy
0 Hold
2 Sell
Moderate Sell
Current: 635.510
Low
460.00
Averages
492.00
High
524.00
Current: 635.510
Low
460.00
Averages
492.00
High
524.00
About DDS
Dillard's, Inc. is a retailer of fashion apparel, cosmetics and home furnishings. The Company’s segments include the operation of retail department stores and a general contracting construction company. It operates 272 Dillard’s stores, including 28 clearance centers, and an Internet store at dillards.com offering a wide selection of merchandise including fashion apparel for women, men and children, accessories, cosmetics, home furnishings and other consumer goods. The Company also operates a general contracting construction company, CDI Contractors, LLC (CDI), a portion of whose business includes constructing and remodeling stores for the Company. Its merchandise selections include its lines of exclusive branded merchandise, such as Antonio Melani, Gianni Bini, GB, Roundtree & Yorke and Daniel Cremieux. Its retail stores are located primarily in shopping malls and open-air centers throughout the southwest, southeast and Midwest regions of the United States.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Dividend Policy Advantage: With a 15-year track record of dividend growth averaging 12.9% annually over the past five years, combined with a forward yield of 4.8%, Dillard's is expected to continue delivering solid capital returns in the future.
- Nexstar's Profitability: As the largest owner of broadcast television stations in the U.S., Nexstar has successfully enhanced profitability through aggressive cost-cutting, currently boasting a forward dividend yield of 3.5% and a payout ratio of only 45%, providing ample cash flow for future acquisitions and debt repayment.
- Target's Turnaround Potential: Target's stock has rallied over the past year, with a forward yield of 4.1% and a payout ratio nearing 60%, while its 57 years of consecutive dividend growth, coupled with pressure from activist hedge funds, may further enhance management's turnaround efforts, positively impacting share price and dividend growth prospects.
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- Sustained Dividend Growth: With a 15-year track record of dividend growth averaging 12.9% annually over the last five years, Dillard's is expected to maintain a forward yield of 4.8%, enhancing investor return expectations.
- Nexstar Acquisition Potential: Nexstar Broadcast Group has successfully improved profitability through aggressive cost-cutting, currently boasting a forward dividend yield of 3.5%, with potential earnings growth from the pending Tegna acquisition.
- Target Shareholder Activism: Target, a Dividend King with 57 years of consecutive dividend growth and a forward yield of 4.1%, may see accelerated transformation efforts due to pressure from activist hedge fund Toms Capital, potentially boosting share price and dividend growth.
See More
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- Increased Market Confidence: Dillard’s, Carnival, and Somnigroup International also received A ratings, suggesting these companies demonstrate strong profitability in the current economic environment, potentially attracting more investor interest.
- Investor Focus: Trip.com Group and Williams-Sonoma also earned A ratings, reflecting analysts' optimistic outlook on their future performance, which may drive their stock prices up post-earnings release.
- Consumer Sector Outlook: Amer Sports and Five Below received A ratings, highlighting the potential of the consumer sector in the economic recovery, prompting investors to monitor these companies' future performance.
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- Portfolio Management: With Todd Combs' departure, Ted Wechsler is set to manage approximately $300 billion in equity investments, likely continuing Buffett's value-investing philosophy to maintain investment stability.
- Cash Reserve Advantage: Berkshire's cash and short-term Treasury holdings total around $377.4 billion, exceeding its total public stock investments, providing robust financial support for future market opportunities.
- Investment Strategy Continuation: Wechsler's successful track record at his previous hedge fund will aid his investment decisions at Berkshire, and despite the challenges of managing large sums, he is still expected to achieve positive investment returns.
See More
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- Portfolio Management: Ted Wechsler is expected to take sole responsibility for managing Berkshire's $300 billion equity portfolio, and despite the challenges of deploying such large sums, he will continue to apply Buffett's value-investing philosophy.
- Cash Reserve Advantage: As of the third quarter, Berkshire's cash and short-term Treasury reserves stood at approximately $377.4 billion, exceeding its total stock investments, providing a robust buffer for future market fluctuations.
- Market Concentration: Berkshire's portfolio remains highly concentrated, with the top five holdings (Apple, American Express, Bank of America, Coca-Cola, and Chevron) accounting for 70% of the total investments, reflecting the risk and reward characteristics of its investment strategy.
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- Valuation Discrepancy: Currently trading at a price-to-earnings ratio of approximately 12.5 times, Macy's remains undervalued compared to Kohl's at 20 times and Dillard's at 34 times, suggesting considerable room for stock price appreciation.
- Earnings Expectations Comparison: Analysts forecast Macy's earnings per share at $2.21 for 2027, while Kohl's and Dillard's are expected at $1.23 and $27.92 respectively, highlighting that Macy's low valuation may be a market misjudgment.
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