Dillards (DDS) Is Today's Dead Cat Bounce Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Dillards ( DDS) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Dillards as such a stock due to the following factors:

  • DDS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $78.5 million.
  • DDS has traded 219,814 shares today.
  • DDS is up 3% today.
  • DDS was down 6.4% yesterday.

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More details on DDS:

Dillard's, Inc. operates as a fashion apparel, cosmetics, and home furnishing retailer in the United States. The company's stores offer a selection of merchandise, including fashion apparel for women, men, and children; accessories; cosmetics; home furnishings; and other consumer goods. The stock currently has a dividend yield of 0.3%. DDS has a PE ratio of 11.5. Currently there are 2 analysts that rate Dillards a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Dillards has been 490,400 shares per day over the past 30 days. Dillards has a market cap of $3.6 billion and is part of the services sector and retail industry. The stock has a beta of 1.37 and a short float of 12.1% with 3.63 days to cover. Shares are down 14% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dillards as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, increase in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • DDS's revenue growth has slightly outpaced the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Multiline Retail industry average, but is less than that of the S&P 500. The net income increased by 4.8% when compared to the same quarter one year prior, going from $48.51 million to $50.87 million.
  • The current debt-to-equity ratio, 0.53, 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 0.11 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Multiline Retail industry and the overall market on the basis of return on equity, DILLARDS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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