Dillard's Inc.

It has paid to own department stores since the Great Recession. Dillard's Inc. ( DDS - Analyst Report ) recently reported record first quarter results and is expected to grow earnings by 37% in fiscal 2012. Despite shares near multi-year highs, this Zacks #1 Rank (Strong Buy) still has value with a price-to-sales ratio of only 0.5.

Dillard's operates 287 department stores and 17 clearance centers in 29 states. It also has an e-commerce web site at www.dillards.com.

Record First Quarter

On May 10, Dillard's kept up it's strong earnings surprise streak when it reported first quarter results that beat the Zacks Consensus by 12.6%. Earnings were a record at $1.88 compared to the consensus of $1.67.

It was the 7th consecutive earnings beat.

Total merchandise sales rose 5% while same store sales also increased 5%. Sales trends were strongest in ladies' accessories and lingerie.

Geographically, sales trends were best in the Central region, followed by the Eastern and Western regions.

Gross margins stayed pretty consistent compared to the prior year at 39% of sales compared to 39.1% a year ago.

Inventory at same stores rose 1% year over year.

Zacks Consensus Estimate For Fiscal 2012 Rises

There is only 1 estimate for fiscal 2012 but it has jumped 8.7% in the last 60 days to $5.75 per share.

That is still massive earnings growth of 37% as the company only earned $4.21 last year.

Shares At 10-Year Highs

If only you had bought Dillard's just after the financial crisis, right? Everyone was saying the department stores were doomed and that the American consumer wouldn't go shopping again for a decade.

They were all wrong.

Shares have soared to new 10-year highs but valuations still look attractive.

In addition to a P/S ratio under 1.0, which usually means a company is undervalued, Dillard's has a forward P/E of 11.1. That is well under the 15x cut-off I use for value stocks.

It also has a price-to-book ratio of 1.5. A P/B ratio under 3.0 indicates there is value.

So far in 2012, the story hasn't changed for Dillard's. It is that rare combination of a value stock which also has double digit growth.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.