) has been attaining new 52-week highs since posting solid second
quarter 2012 results on August 8 that included an earnings surprise
Since its second quarter report last month, shares of this Zacks
#1 Rank (Strong Buy) company have escalated 12.5% to hit another
52-week high on September 14. Moreover, with a robust stock
growth (year-to-date return of 79.6%), strong results and a history
of beating quarterly earnings estimates, this stock offers an
attractive investment opportunity.
The Rank Driver
Better-than-expected second quarter earnings, healthy
comparable-store sales, effective cost management and shareholder
friendly moves - are the primary rank drivers for this stock.
Dillard's, which competes with
), posted second-quarter 2012 earnings of 63 cents, significantly
outpacing the Zacks Consensus Estimate of 49 cents and more than
doubling from the prior-year quarter earnings of 30 cents.
Dillard's top line (including CDI Contractors LLC or CDI) jumped
3.2% to $1,487.9 million from $1,441.7 million in the year-ago
quarter. Merchandise sales, excluding CDI, came in at $1,456
million, compared with $1,426 million. The company's total revenue
(including other income) of $1,525.2 million surpassed the Zacks
Consensus Estimate of $1,466 million.
The robust performance was backed by healthy comparable-store
sales growth and improved margins. Management's cost cutting
initiatives, including restructuring and inventory management, is
facilitating it to abridge costs and boost profitability.
The company benefits from its improvements in inventory
management, which is focused on conservative purchasing and
efficiently matching the timing of receipts with demand, which
ultimately results in reduced markdowns.
Further, Dillard's healthy balance sheet and adequate cash flows
allow it to enhance shareholders value through share repurchases.
During the recently concluded quarter, the company bought back
nearly 2.1 million shares worth $134.6 million and had
authorization worth almost $115.4 million remaining under its share
The company's estimates for both fiscal 2012 and 2013 each,
witnessed a surge of 25 cents in the last 60 days. The Zacks
Consensus Estimate for fiscal 2012 added about 4.3% to $6.00 per
share in the past 2 months, reflecting a year-over-year growth of
42.5%. The Zacks Consensus Estimate for fiscal 2013 is up 4.0% to
$6.50 per share over the same period, representing an 8.3%
Dillard's currently trades at a forward P/E of 13.2x, at par
with the peer group average. The trailing 12-month ROE is 13.1%,
significantly higher than the peer group average of 9.4%,
indicating that the company reinvests its earnings more efficiently
than its peer group. Moreover, the price-to-sales ratio reflects a
discount of 1.7% to the peer group, with shares trading at a
multiple of 0.58.
About the Company
Headquartered in Little Rock, Arkansas, Dillard's is a large
department store chain, featuring fashion apparel and home
furnishings. The company's primary product categories are: women's
and junior's apparel; shoes; accessories and lingerie; men's
clothing and accessories; cosmetics; home; and children's clothing.
Its merchandise mix consists of both branded and private-label
items. At the end of the second quarter, Dillard's operated 304
stores including 16 clearance centers and one Internet store across
29 states, all under the Dillard's brand name. The company was
founded in 1938.
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