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Are Investors Undervaluing Dillard's (DDS) Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Dillard's (DDS - Free Report) . DDS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.

We also note that DDS holds a PEG ratio of 0.78. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DDS's PEG compares to its industry's average PEG of 0.98. Within the past year, DDS's PEG has been as high as 0.78 and as low as 0.47, with a median of 0.67.

Another notable valuation metric for DDS is its P/B ratio of 2.63. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.78. DDS's P/B has been as high as 2.63 and as low as 0.42, with a median of 1.24, over the past year.

Finally, we should also recognize that DDS has a P/CF ratio of 9.06. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. DDS's P/CF compares to its industry's average P/CF of 11.01. Over the past 52 weeks, DDS's P/CF has been as high as 15.93 and as low as 4.60, with a median of 8.47.

These are only a few of the key metrics included in Dillard's's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DDS looks like an impressive value stock at the moment.


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