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The Zacks Consensus Estimate for fiscal third-quarter revenues of $1.42 billion indicates a 0.2% decline from the year-ago reported figure. The consensus estimate for earnings is pegged at $6.43 per share, implying a 16.8% decrease from the year-ago quarter’s reported figure. The consensus estimate has moved down 0.8% in the past 30 days.
In the last reported quarter, the company registered an earnings surprise of 23%. We note that in the trailing four quarters, its bottom line beat the Zacks Consensus Estimate by 24%, on average.
Factors Likely to Drive DDS’ Q3 Results
Dillard's has been gaining from its efforts to capture growth opportunities in brick-and-mortar stores and the e-commerce business, and strong consumer demand. The company’s focus on inventory management, store and e-commerce expansion, and trendy merchandise has reinforced its position amid a competitive retail landscape. DDS has been gaining from enhancing brand relations, in-trend categories and store remodels. Its activewear brand is expected to have gained market share in the to-be-reported quarter.
In addition, DDS’s e-commerce business has been well-placed on the enhancement of merchandise assortments and effective inventory management. We expect the company’s fiscal third-quarter performance to have been driven by its focus on increasing productivity at existing stores, improving the omnichannel platform and enhancing domestic operations.
Dillard's efforts to capture growth opportunities in brick-and-mortar stores and e-commerce have been key drivers. It has been focused on enhancing brand relationships, remodeling stores and optimizing its activewear segment. Gains from these initiatives are likely to have widened the customer base and boosted the company's overall sales in the fiscal third quarter. Our model predicts a year-over-year comparable-store sales rise of 0.6%, while retail sales are expected to grow 0.2% for the fiscal third quarter.
However, Dillard’s has been witnessing the adverse impacts of a tough retail environment due to the cautious buying behavior of consumers. Additionally, higher expenses are likely to have dented margins and the bottom line in the fiscal third quarter.
We expect SG&A expenses to increase 3.9% year over year for the fiscal third quarter, with SG&A expense rate anticipated to expand 100 basis points to 29.9%. Our model predicts a 16.7% year-over-year decline in operating profit, with a 220-bps contraction in the operating margin.
Earnings Whispers for DDS Stock
Our proven model does not conclusively predict an earnings beat for Dillard’s this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chance of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Dillard’s currently has an Earnings ESP of +2.70% and a Zacks Rank #4 (Sell).
DDS Stock’s Valuation Picture & Price Performance
From a valuation perspective, Dillard’s is trading at a premium relative to industry and historical benchmarks. The company has a forward 12-month price-to-sales ratio of 1.46X, higher than the Retail - Regional Department Stores industry’s average of 0.49X. The company is trading below its five-year high of 1.52X.
Image Source: Zacks Investment Research
The market movements have shown that DDS shares have gained 29.7% in the past three months compared with the industry's 41.3% growth.
Image Source: Zacks Investment Research
Stocks With the Favorable Combination
Here are a few companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
American Eagle Outfitters Inc. (AEO - Free Report) currently has an Earnings ESP of +3.01% and a Zacks Rank of 2. The company is likely to register an increase in the top line when it reports third-quarter fiscal 2025 numbers. The consensus mark for revenues is pegged at $1.32 billion, which indicates an increase of 2.2% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AEO’s quarterly earnings per share of 43 cents implies a decline of 10.4% from the year-ago quarter’s actual. The consensus mark has increased by a penny in the past seven days. AEO has a trailing four-quarter earnings surprise of 30.3%, on average.
Dollar General Corporation (DG - Free Report) currently has an Earnings ESP of +12.31% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports third-quarter fiscal 2025 numbers. The consensus mark for revenues is pegged at $10.62 billion, which indicates a rise of 4.3% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for DG’s quarterly earnings per share of 95 cents implies 6.7% year-over-year growth. The consensus mark for earnings has been unchanged in the past 30 days. DG has a trailing four-quarter earnings surprise of 11.3%, on average.
Five Below Inc. (FIVE - Free Report) currently has an Earnings ESP of +74.7% and a Zacks Rank #2. The company is likely to register an increase in the top line when it reports third-quarter fiscal 2025 numbers. The consensus mark for revenues is pegged at $969.9 million, which indicates a rise of 15% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for FIVE’s second-quarter fiscal 2025 EPS is pegged at 22 cents, implying a 47.6% year-over-year decline. The consensus mark for EPS has moved up 10% in the past 30 days. FIVE delivered a trailing four-quarter earnings surprise of 50.5%, on average.
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Dillard's Pre-Q3 Earnings Indicate Mixed Trends: Is It Worth Buying?
Key Takeaways
Dillard’s, Inc. (DDS - Free Report) is expected to register year-over-year declines in the top and bottom lines when it reports third-quarter fiscal 2025 numbers.
The Zacks Consensus Estimate for fiscal third-quarter revenues of $1.42 billion indicates a 0.2% decline from the year-ago reported figure. The consensus estimate for earnings is pegged at $6.43 per share, implying a 16.8% decrease from the year-ago quarter’s reported figure. The consensus estimate has moved down 0.8% in the past 30 days.
In the last reported quarter, the company registered an earnings surprise of 23%. We note that in the trailing four quarters, its bottom line beat the Zacks Consensus Estimate by 24%, on average.
Factors Likely to Drive DDS’ Q3 Results
Dillard's has been gaining from its efforts to capture growth opportunities in brick-and-mortar stores and the e-commerce business, and strong consumer demand. The company’s focus on inventory management, store and e-commerce expansion, and trendy merchandise has reinforced its position amid a competitive retail landscape. DDS has been gaining from enhancing brand relations, in-trend categories and store remodels. Its activewear brand is expected to have gained market share in the to-be-reported quarter.
In addition, DDS’s e-commerce business has been well-placed on the enhancement of merchandise assortments and effective inventory management. We expect the company’s fiscal third-quarter performance to have been driven by its focus on increasing productivity at existing stores, improving the omnichannel platform and enhancing domestic operations.
Dillard's efforts to capture growth opportunities in brick-and-mortar stores and e-commerce have been key drivers. It has been focused on enhancing brand relationships, remodeling stores and optimizing its activewear segment. Gains from these initiatives are likely to have widened the customer base and boosted the company's overall sales in the fiscal third quarter. Our model predicts a year-over-year comparable-store sales rise of 0.6%, while retail sales are expected to grow 0.2% for the fiscal third quarter.
Dillard's, Inc. Price and EPS Surprise
Dillard's, Inc. price-eps-surprise | Dillard's, Inc. Quote
However, Dillard’s has been witnessing the adverse impacts of a tough retail environment due to the cautious buying behavior of consumers. Additionally, higher expenses are likely to have dented margins and the bottom line in the fiscal third quarter.
We expect SG&A expenses to increase 3.9% year over year for the fiscal third quarter, with SG&A expense rate anticipated to expand 100 basis points to 29.9%. Our model predicts a 16.7% year-over-year decline in operating profit, with a 220-bps contraction in the operating margin.
Earnings Whispers for DDS Stock
Our proven model does not conclusively predict an earnings beat for Dillard’s this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chance of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Dillard’s currently has an Earnings ESP of +2.70% and a Zacks Rank #4 (Sell).
DDS Stock’s Valuation Picture & Price Performance
From a valuation perspective, Dillard’s is trading at a premium relative to industry and historical benchmarks. The company has a forward 12-month price-to-sales ratio of 1.46X, higher than the Retail - Regional Department Stores industry’s average of 0.49X. The company is trading below its five-year high of 1.52X.
Image Source: Zacks Investment Research
The market movements have shown that DDS shares have gained 29.7% in the past three months compared with the industry's 41.3% growth.
Image Source: Zacks Investment Research
Stocks With the Favorable Combination
Here are a few companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
American Eagle Outfitters Inc. (AEO - Free Report) currently has an Earnings ESP of +3.01% and a Zacks Rank of 2. The company is likely to register an increase in the top line when it reports third-quarter fiscal 2025 numbers. The consensus mark for revenues is pegged at $1.32 billion, which indicates an increase of 2.2% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AEO’s quarterly earnings per share of 43 cents implies a decline of 10.4% from the year-ago quarter’s actual. The consensus mark has increased by a penny in the past seven days. AEO has a trailing four-quarter earnings surprise of 30.3%, on average.
Dollar General Corporation (DG - Free Report) currently has an Earnings ESP of +12.31% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports third-quarter fiscal 2025 numbers. The consensus mark for revenues is pegged at $10.62 billion, which indicates a rise of 4.3% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for DG’s quarterly earnings per share of 95 cents implies 6.7% year-over-year growth. The consensus mark for earnings has been unchanged in the past 30 days. DG has a trailing four-quarter earnings surprise of 11.3%, on average.
Five Below Inc. (FIVE - Free Report) currently has an Earnings ESP of +74.7% and a Zacks Rank #2. The company is likely to register an increase in the top line when it reports third-quarter fiscal 2025 numbers. The consensus mark for revenues is pegged at $969.9 million, which indicates a rise of 15% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for FIVE’s second-quarter fiscal 2025 EPS is pegged at 22 cents, implying a 47.6% year-over-year decline. The consensus mark for EPS has moved up 10% in the past 30 days. FIVE delivered a trailing four-quarter earnings surprise of 50.5%, on average.