Dillard's, Inc. (DDS) first-quarter 2011 earnings of $1.27 per share beat the Zacks Consensus Estimate of $0.91 and surged approximately 84% from the prior-year quarter on the heels of strong comparable store sales growth coupled with efficient inventory management. Management is also undertaking restructuring initiatives and inventory reduction efforts to save costs and boost profitability.
Moreover, in order to enhance its liquidity position and manage risks more efficiently, Dillard's has recently formed a wholly-owned real estate investment trust company and a captive insurance company. Further, Dillard's healthy cash flow and balance sheet allow it to make shareholder-friendly moves, such as acquisitions, dividends and share repurchases.
Currently, we are maintaining our long-term Outperform recommendation on the stock. Our target price of $64.00, 16.8X 2011 EPS, reflects this view.
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