Dillard's (DDS) Stock Plunges as Credit Suisse Lowers Earnings Estimate

NEW YORK (TheStreet) -- Shares of Dillard's   (DDS) are plunging 9.28% to $112.67 in afternoon trading Friday after Credit Suisse lowered its 2015 earnings estimate to $8 from $8.20.

This action comes after the department store chain reported first quarter results earlier this month. The company reported revenue of $1.57 billion, or $2.66 per share, compared to revenue of $1.55 billion, or $2.56 per share for the same quarter a year ago. 

While the company's revenue slightly increased from last year's, analysts at Thomson Reuters expected the retail giant to report revenue of $1.61 billion, or $2.78 per share for the first quarter.

"We are disappointed with our first quarter performance," said Dillard's CEO William Dillard, II. "Our 1% sales decline hampered our ability to leverage operating expenses and to drive net income growth."

Credit Suisse analysts said, "The primary issue for the company remains a lack of revenue growth. Comps and retail revenues declined for the second time in two years, and without revenue growth, maintaining operating margins will be challenging."

Additionally, the company called out the Texas market as underperforming the overall company, with the eastern region being the best performer.

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 revenue growth, solid stock price performance, growth in earnings per share, increase in net income and attractive valuation levels. We feel its strengths outweigh the fact that the company shows low profit margins."

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

  • DDS's revenue growth has slightly outpaced the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 4.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 36.27% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DDS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • DILLARDS INC has improved earnings per share by 17.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, DILLARDS INC increased its bottom line by earning $7.83 versus $7.13 in the prior year. This year, the market expects an improvement in earnings ($8.65 versus $7.83).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 9.6% when compared to the same quarter one year prior, going from $119.10 million to $130.49 million.
  • You can view the full analysis from the report here: DDS Ratings Report

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