• 288 days Will The ECB Continue To Hike Rates?
  • 288 days Forbes: Aramco Remains Largest Company In The Middle East
  • 290 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 690 days Could Crypto Overtake Traditional Investment?
  • 695 days Americans Still Quitting Jobs At Record Pace
  • 697 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 700 days Is The Dollar Too Strong?
  • 700 days Big Tech Disappoints Investors on Earnings Calls
  • 701 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 703 days China Is Quietly Trying To Distance Itself From Russia
  • 703 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 707 days Crypto Investors Won Big In 2021
  • 707 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 708 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 710 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 711 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 714 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 715 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 715 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 717 days Are NFTs About To Take Over Gaming?
FAST Graphs

FAST Graphs

FAST Graphs

F.A.S.T. Graphs™ is a powerful research tool providing "essential fundamentals at a glance" on over 17,000 symbols. F.A.S.T. Graphs™ empowers the user to research stocks…

Contact Author

  1. Home
  2. Markets
  3. Other

Dillards Inc: Fundamental Stock Research Analysis

Before analyzing a company for investment, it's important to have a perspective on how well the business has performed. Because at the end of the day, if you are an investor, you are buying the business. The FAST Graphs™ presented with this article will focus first on the business behind the stock. The orange line on the graph plots earnings per share since 2002. A quick glance vividly reveals the historical operating record of the company.

This article will reveal the business prospects of Dillards Inc (DDS) through the lens of FAST Graphs - fundamentals analyzer software tool.

Earnings Determine Market Price: The following earnings and price correlated FAST Graphs™ clearly illustrates the importance of earnings. The Earnings Growth Rate Line or True Worth™ Line (orange line with white triangles) is correlated with the historical stock price line. On graph after graph the lines will move in tandem. If the stock price strays away from the earnings line (over or under), inevitably it will come back to earnings.


Earnings & Price Correlated Fundamentals-at-a-Glance

A quick glance at the historical earnings and price correlated FAST Graphs™ on Dillards Inc shows a picture of undervaluation based upon the historical earnings growth rate of 19.7% and a current P/E of 13.8. Analysts are forecasting the earnings growth to continue at about 15.7%, and when you look at the forecasting graph below, the stock appears undervalued (it's inside of the value corridor of the five orange lines - based on future growth).

Dillards Inc: Historical Earnings, Price, Dividends and Normal P/E Since 2002

Dillards Inc -CL A(DDS)


Performance Table Dillards Inc

The associated performance results with the earnings and price correlated graph, validates the principles regarding the two components of total return: capital appreciation and dividend income. Dividends are included in the total return calculation and are assumed paid, but not reinvested.

When presented separately like this, the additional rate of return a dividend paying stock produces for shareholders becomes undeniably evident. In addition to the 16.2% capital appreciation (green circle), long-term shareholders of Dillards Inc, assuming an initial investment of $1,000, would have received an additional $111.26 in dividends (blue highlighting) that increased their total return from 16.2% to 16.5% per annum versus 3.4% in the S&P 500.

Dillards Inc -CL A(DDS)

The following graph plots the historical P/E ratio (the dark blue line) in conjunction with 10-year Treasury note interest. Notice that the current price earnings ratio on this quality company is as normal as it has been since 2002.

Dillards Inc -CL A(DDS)

A further indication of valuation can be seen by examining a company's current P/S ratio relative to its historical P/S ratio. The current P/S ratio for Dillards Inc is .60 which is historically high.

Dillards Inc -CL A(DDS)


Looking to the Future

Extensive research has provided a preponderance of conclusive evidence that future long-term returns are a function of two critical determinants:

  1. The rate of change (growth rate) of the company's earnings

  2. The price or valuation you pay to buy those earnings

Forecasting future earnings growth, bought at sound valuations, is the key to safe, sound and profitable performance.

The Estimated Earnings and Return Calculator Tool is a simple yet powerful resource that empowers the user to calculate and run various investing scenarios that generate precise rate of return potentialities. Thinking the investment through to its logical conclusion is an important component towards making sound and prudent commonsense investing decisions.

The consensus of 4 leading analysts reporting to Capital IQ forecast Dillards Inc's long-term earnings growth at 15.7% (orange circle). Dillards Inc has medium long-term debt at 28% of capital (red circle). Dillards Inc is currently trading at a P/E of 13.8, which is inside the value corridor (defined by the five orange lines) of a maximum P/E of 18.8. If the earnings materialize as forecast, based upon forecasted earnings growth of 15.7 %, Dillards Inc's share price would $199.19 at the end of 2018 (brown circle on EYE Chart), which would represent a 18.7% annual rate of total return which includes dividends paid (yellow highlighting).

Dillards Inc -CL A(DDS)


Earnings Yield Estimates

Discounted Future Cash Flows: All companies derive their value from the future cash flows (earnings) they are capable of generating for their stakeholders over time. Therefore, because Earnings Determine Market Price in the long run, we expect the future earnings of a company to justify the price we pay.

Since all investments potentially compete with all other investments, it is useful to compare investing in any prospective company to that of a comparable investment in low risk Treasury bonds. Comparing an investment in Dillards Inc to an equal investment in 10-year Treasury bonds illustrates that Dillards Inc's expected earnings would be 8.6 (purple circle) times that of the 10-year T-bond interest (see EYE chart below). This is the essence of the importance of proper valuation as a critical investing component.

Dillards Inc -CL A(DDS)


Summary & Conclusions

This report presented essential "fundamentals at a glance" illustrating the past and present valuation based on earnings achievements as reported. Future forecasts for earnings growth are based on the consensus of leading analysts. Although with just a quick glance you can know a lot about the company, it's imperative that the reader conducts their own due diligence in order to validate whether the consensus estimates seem reasonable or not.

 


Disclosure: No position at the time of writing.

 

Back to homepage

Leave a comment

Leave a comment