Why Dillard's (DDS) Stock Is Up Today

NEW YORK (TheStreet) -- Dillard's (DDS) was gaining 14.5% to $110.62 Friday after beating analysts' expectations for earnings in the first quarter.

For the first quarter Dillard's reported EPS of $2.47 a share, beating the Capital IQ Consensus Estimate of $2.39 a share by 8 cents. Revenue was flat year-over-year to $1.59 billion in the quarter. Analysts expected revenue of $1.6 billion for the quarter.

The department store operator said same-store sales grew 2% in the first quarter. Consolidated gross margin was 39.5% for the quarter, the same as the year-ago quarter.

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TheStreet Ratings team rates DILLARDS INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate DILLARDS INC (DDS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • Net operating cash flow has slightly increased to $328.76 million or 8.56% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.65%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • DILLARDS INC's earnings per share declined by 19.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DILLARDS INC increased its bottom line by earning $7.13 versus $6.89 in the prior year. This year, the market expects an improvement in earnings ($7.80 versus $7.13).
  • The current debt-to-equity ratio, 0.41, 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 0.34 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • You can view the full analysis from the report here: DDS Ratings Report

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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.

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