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Todd Carlisle avatar
Todd Carlisle
@tcardizzle
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Alright y'all due to popular demand let's talk Due Dillardsance. @buildingbread had a post earlier in the week pointing out how insane of a run $DDS has been on. Members of the discord channel (link at the end) can tell you I've been screaming about Dillard's for the better part of this year. Why? I mean they've been on a 600% bender so they're definitely run out right? Well let me run down some of the figures for you and you tell me. Hopefully by the end you realize that omitting stocks just because they've had significant gains is a great way to lose out on significant gains. For exhibit A I'd like to point you to some of the easiest to see metrics. On EPS, Q1 saw a 430% beat, while Q2 saw a 260% beat. Q3 Dillard’s posted a whopping 408% beat on the bottom line. Revenues also surged, as the company saw $1.48B v 1.02B last year. Same store sales were up 48% and their retail gross margin came in at 46.7% vs 36.6% last year. Yes you read that correctly. They boosted their gross margin over 10%. Dillard’s hasn’t missed on earnings since early 2020, making the Q3 beat the sixth straight. The company is on track to post full-year EPS well above $30. That means Dillard's stock trades for just 10 times its likely current-year earnings. Well they're overextend right? Let's look at their metrics compared with the industry as a whole. P/E Ratio TTM 12.71 P/B Ratio 5.71 P/S Ratio 1.86 PEG ratio 0.79 Macy's $M P/E Ratio TTM 9.02 P/B Ratio 3.456 P/S Ratio 0.609 PEG Ratio 0.76 Kohl's $KSS P/E Ratio TTM 12.28 P/B Ratio 1.689 P/S Ratio 0.5598 PEG Ratio 1.08 In fact for the retail sector the historical P/E ratio is 22. If you're familiar with the PEG ratio it takes P/E and factors in future growth with 1 being fair value, below 1 increasingly undervalued and above 1 increasingly overvalued. Unlike P/E which varies from industry to industry the PEG ratio is consistent. With Dillard's sporting a 0.79 PEG it indicates they are actually still undervalued. I've posted before about the affect of share buybacks on stock prices and this one is no exception. In the nine months ended Oct 30, 2021, the company bought back 2.6 million shares worth $410.3 million, while it repurchased 1.2 million shares worth $239.2 million in the fiscal third quarter under its March 2018 and May 2021 share repurchase program. With this, Dillard's completed all share repurchases under its earlier share repurchase plan announced in March 2018. As of Oct 30, it had $262.9 million authorization left under its May 2021 plan. At current prices this is over 700k shares left to be purchased. The company also just declared a special dividend of $15 per share . The special dividend is payable December 15, 2021, to shareholders of record as of November 29, 2021. Keep in mind t+2 settlement means you would actually have to purchase two sessions before. I even took it to Glassdoor to see what employees of the company were saying. Almost without exception they cited great compensation, challenging goals, and excellent management. With all reviews you get your standard complaints but the stuff that was company specific was glowing. So what do you get when you have solid fundamentals, excellent management, and over $200 million to buy back shares? I'm betting the answer is significant future gains. Next time before dismissing a stock simply because it's done well, take the time to look into WHY it's done well. If those conditions haven't changed ask yourself, why wouldn't it continue to do well? #tcardizzle #duediligence Want to get cued in on stocks like this way before everyone starts talking about it? Join us https://discord.gg/emntYaQkDu
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