Dillard's (DDS) Stock Slumps Ahead of Monday's Earnings Release

Dillard's (DDS) stock is lower in afternoon trading on Friday, ahead of the release of the company's 2015 third quarter financial results before the market open on Monday.
By Rachel Graf ,

NEW YORK (TheStreet) -- Dillard's (DDS) - Get Report stock is down by 7.34% to $78.73 on heavy volume in afternoon trading on Friday, before the company reports its 2015 third quarter financial results before Monday's market open. 

Analysts expect the retailer to post a year over year decline in earnings and rise in revenue for the most recent quarter.

Dillard's has been forecast to report earnings of $1.20 per share on revenue of $1.49 billion by analysts surveyed by Thomson Reuters. 

Last year, the company reported earnings of $1.30 per share on revenue of $1.46 billion for the 2014 third quarter.

Additionally, weaker-than-expected sales for October are pressuring retail stocks this afternoon. Retail sales increased by 0.1% last month, missing economists' expectations for a 0.3% rise, according to Reuters.

About 1.41 million shares of Dillard's have been traded so far today, more than triple the company's average trading volume of about 459,568 shares a day.

Separately, TheStreet Ratings team rates DILLARDS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

We rate DILLARDS INC (DDS) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.27 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Net operating cash flow has declined marginally to -$29.30 million or 4.55% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Multiline Retail industry average, but is greater than that of the S&P 500. The net income has decreased by 13.1% when compared to the same quarter one year ago, dropping from $34.45 million to $29.95 million.
  • You can view the full analysis from the report here: DDS

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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