Dillard’s, Inc. – Value Analysis (NYSE:DDS) : November 13, 2017

Capitalcube gives Dillard’s, Inc. a score of 66.

Our analysis is based on comparing Dillard’s, Inc. with the following peers – Macy’s Inc, Kohl’s Corporation, J. C. Penney Company, Inc., Stage Stores, Inc., Sears Holdings Corporation, Nordstrom, Inc., Bon-Ton Stores, Inc., Sears Hometown & Outlet Stores, Inc. and TJX Companies Inc (M-US, KSS-US, JCP-US, SSI-US, SHLD-US, JWN-US, BONT-US, SHOS-US and TJX-US).

Investment Outlook

Dillard’s, Inc. has a fundamental score of 66 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It trades at a lower Price/Book multiple (0.90) than its peer median (1.17).
  • The market expects DDS-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • DDS-US has relatively high profit margins while operating with median asset turns.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • DDS-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • DDS-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • DDS-US seems to be constrained by the current level of debt.

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Leverage & Liquidity

DDS-US is debt-constrained.

  • With debt at a relatively high 36.78% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 61.51%), and interest coverage level of 3.95x, DDS-US seems debt-constrained.
  • All 9 peers for the company have an outstanding debt balance.

DDS-US has maintained its Some Capacity profile from the recent year-end.

  • DDS-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 8.81x in 2015.
  • Though its interest coverage decreased to 3.95x from 5.11x (in 2017), its peer median remained relatively stable during this period at 2.42x.
  • Interest coverage fell 0.93 points relative to peers. It is also above the 2.50x coverage benchmark unlike the peer median.
  • DDS-US‘s debt-EV is similar to last year’s high of 36.78%, which compares to a low of 16.14% in 2015.
  • Though its debt-EV has remained relatively stable at 36.78% compared to 2017, its peer median has increased to 61.51% from 46.39% during this period.
  • Relative to peers, debt-EV fell 15.12 percentage points.

Access the detailed analysis for Dillard’s, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Macy’s Inc 47.76 1.29 4.81 24.91
Kohl’s Corporation 45.02 1.63 4.41 35.77
J. C. Penney Company, Inc. 75.26 1.45 0.89 11.2
Stage Stores, Inc. 88.99 2.73 -6.36 15.79
Sears Holdings Corporation 88.62 0.92 -3.2 -51.17
Nordstrom, Inc. 31.83 1 7.35 38.26
Bon-Ton Stores, Inc. 99.3 2.15 0.07 4.08
Sears Hometown & Outlet Stores, Inc. 77.41 1.75 -15.77 -83.77
TJX Companies Inc 5.12 1.63 55.38 141.62
Dillard’s, Inc. Class A 36.78 1.42 3.95 40.63
Peer Median 61.51 1.54 2.42 20.35
Best In Class 5.12 2.73 55.38 141.62

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Company Profile

Dillard’s, Inc. engages in the retail of fashion apparel, cosmetics and home furnishings. It operates through the Operation of Retail Department Stores and General Contracting Construction segments. The Operation of Retail Department Stores segment includes cosmetics, ladies apparel, accessories, and lingerie, juniors and children’s apparel, mens apparel and accessories, shoes, and home and furniture. The General Contracting Construction segment operates general contracting construction companies, such as CDI Contractors LLC and CDI Contractors, Inc. for constructing and remodeling stores. The company was founded by William Thomas Dillard in 1938 and is headquartered in Little Rock, AR.

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