Shares of Dillard’s Inc. (DDS) reached a new 52-week high of $97.87 yesterday, and eventually closed trade at $96.29. The average volume of shares traded over the last 3 months was over 559K. Notably, this leading fashion apparel, cosmetics and home furnishings retailer amassed a year-to-date return of 18.3%.
Moreover, Dillard’s currently trades at a forward P/E of 13.05x, a 3.5% discount to the peer group average of 13.53x. The last traded price is 13.3% above the Zacks Consensus average analyst price target of $85.00.
The company’s strong fiscal third-quarter 2013 earnings, healthy comparable-store sales, effective cost management and new share repurchase program of $250 million have provided momentum to the stock.
With a positive earnings surprise of 13% in third-quarter fiscal 2013, the company surpassed the Zacks Consensus Estimate for the third consecutive quarter in the trailing 4 quarters. The average earnings surprise for the past 4 quarters was approximately 12.2%. The company’s third-quarter fiscal 2013 earnings benefited from the successful execution of its long-term growth strategies and strength of its distinguished and varied assortments.
However, with Dillard’s holding a Zacks Rank #4 (Sell), investors should be cautious about the performance of the stock. If we look at the company’s net sales performance in the last 2 quarters, it has declined sequentially by 0.8% and 4.5% in the third and second quarters, respectively. Moreover, the Zacks Consensus Estimate for earnings has also been showing declining trends with fiscal 2013 estimate waning 0.3% and fiscal 2014 estimate falling 0.6% in the last 60 days.
Other Stocks to Consider
Some better-ranked retail stocks include Bon-Ton Stores Inc. (BONT), Macy’s Inc. (M) and Finish Line Inc. (FINL). While Bon-Ton Stores holds a Zacks Rank #1 (Strong Buy), Macy’s and Finish Line carry a Zacks Rank #2 (Buy).
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