Dillards (DDS) Showing Signs Of Being Water-Logged And Getting Wetter

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.

Trade-Ideas LLC identified Dillards ( DDS) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) 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 $52.1 million.
  • DDS has traded 1.7 million shares today.
  • DDS traded in a range 205.5% of the normal price range with a price range of $6.10.
  • DDS traded below its daily resistance level (quality: 101 days, meaning that the stock is crossing a resistance level set by the last 101 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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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 0.2%. DDS has a PE ratio of 16. Currently there are no analysts that rate Dillards a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Dillards has been 402,400 shares per day over the past 30 days. Dillards has a market cap of $4.7 billion and is part of the services sector and retail industry. The stock has a beta of 0.92 and a short float of 3.9% with 2.21 days to cover. Shares are up 2.2% year-to-date as of the close of trading on Thursday.

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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, 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 ratings report include:
  • 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.

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