Overview:
We will examine the reasons why Dillard’s stock is attractive and why value investors including, David Einhorn, have been buying.
Dillard’s (NYSE:DDS) encompasses numerous value metrics I look for in an undervalued situation.
Dillard’s has: ample liquidity, low debt, positive earnings, low p/e, strong balance sheet, a large stock buyback program, strong cash flows, and is temporarily out of favor with investors.
The company:
Dillard’s, Inc. ranks among the nation’s largest fashion apparel, cosmetics and home furnishings retailers with annual sales exceeding $6.5 billion. The Company focuses on delivering style, service and value to its shoppers by offering compelling apparel, cosmetics and home selections complemented by exceptional customer care. Dillard’s stores offer a broad selection of merchandise and feature products from both national and exclusive brand sources. The Company operates 271 Dillard’s locations and 23 clearance centers spanning 29 states plus an Internet store at www.dillards.com. (Source: Dillard’s website:)
Recent Earnings and Sales:
First Quarter Results
- Dillard’s reported net income for the 13 weeks ended April 29, 2017 of $66.3 million, or $2.12 per share, compared to net income of $77.4 million, or $2.17 per share, for the prior year first quarter.
- Net sales for the 13 weeks ended April 29, 2017 were $1.418 billion and $1.503 billion for the 13 weeks ended April 30, 2016. Net sales includes the operations of the Company’s construction business, CDI Contractors, LLC (“CDI”).
- Total merchandise sales decreased 4% for the 13-week period ended April 29, 2017. Sales in comparable stores for the period also decreased 4%.
Dillard’s Chief Executive Officer, William T. Dillard, II, stated, “While our sales decline weighed heavily on our operating results, we remained active in returning cash to shareholders through $93 million of share repurchase and dividends. We still ended the quarter with $302 million of cash largely due to better cash management.”(Einhorn picks DDS)
