Regional department store chain Dillard's (NYSE:DDS) recently turned in an earnings report that far surpassed expectations on several fronts. Not only did it turn in wins for earnings and revenue, it also shattered Wall Street expectations and drew in trading volume that was nearly three times normal levels. The company turned in gains of 22.7% on Friday and held onto those gains going into trading this morning, adding an additional 10.41% as of this writing. Analyst sentiment is turning increasingly bullish by degrees, but can Dillard's keep its streak alive as we continue into 2021?
Dillard's Earnings Call Proves a Monster Win
With the economy reopening and most states allowing traffic to resume on at least some level—some states much more so than others—in the wake of the Covid-19 pandemic, Dillard's gained traffic and shoppers accordingly. Total retail sales, reports noted, hit $1.3 billion. That's not quite the $1.42 billion seen in the first quarter of 2019, but it's much closer to normal than previously seen. Indeed, further reports note that, in the last part of the first quarter, Dillard's was doing more business than it was in 2019. This suggests that sales momentum is trending upward, and Dillard's stands to benefit accordingly.
Earnings were even better; the company brought in an adjusted earnings per share (EPS) figure of $6.37. Before adjustment, that number actually came in at $7.25 per share. No matter which figure you use, it's still wildly beyond analysts' expectations, who were looking for a consensus figure of $1.54. It's also double what the company posted in the first quarter of 2019, so it's a win on every front.
The company also offered some insight into other metrics, noting that retail gross margin was up to 42.7% thanks to pandemic survival measures like close inventory management. Not only does this handily beat the 12.8% figures posted a year ago, but it also beats the figures seen in the first quarter of 2019, which featured 37.8%. Even its operating expenses were down against 2019's first quarter, as the company lowered said expenses 17% over that much more normal time.
What Do Financial Analysts Think About Dillard's Stock?
Dillard's investor relations may have served up a win, but analysts are remaining more cautious, even with this blockbuster earnings report out. However, there is a trend at work, and the trend is increasingly bullish from financial analysts, though the increase is slow. Dillard's has held a consensus “hold” rating for the last two years.
A year ago, the company had three “hold” ratings and three “sell” ratings to its credit. That ratio held into February 2021, when the company lost a “sell” and offered up a combined total of three “hold” and two “sell” ratings. Today, however, we currently stand at three “hold” ratings and one “sell” rating, which suggests sell-side analysts are departing the field.
Price targets are also on the rise at Dillard's. The current average is $74.75, with a high of $110 and a low of $49. That's up a little better than double from the average price target a year ago, which came in at $35.67. Recent movements have also been positive for Dillard's; just last Friday, Telsey Advisory Group increased its target from $80 to $110, that previously-noted high point. Price target hikes have been seen throughout 2021 so far, including Deutsche Bank Aktiengesellschaft, which upgraded from $60 to $80 in March, and JPMorgan Chase & Co., which upgraded from $42 to $49. With Dillard's stock currently selling at $139.37 as of this writing, that suggests some downside potential in play.
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