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Dillard's (DDS) to Report Q1 Earnings: What's in the Offing?

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Dillard's, Inc. (DDS - Free Report) displays mixed outcomes when it comes to quarterly releases. The company’s past quarters reflect positive earnings and sales beat trends. However, this departmental store chain is likely to continue witnessing a year-over-year decline in the bottom line when it reports first-quarter fiscal 2019 numbers.

In the last reported quarter, this Arkansas-based company posted an earnings beat despite a year-over-year decline. However, the company delivered average four-quarter positive earnings surprise of 11.2%.

Coming to projections for the quarter under review, we note that the Zacks Consensus Estimate for the company’s earnings is pegged at $2.70, suggesting a drop of 6.6% from $2.89 earned in the year-ago period. Notably, estimates have witnessed a downtrend in the past 30 days. For revenues, the consensus mark stands at $1,484 million, indicating nearly 0.4% decline from the year-ago quarter.

Dillard's, Inc. Price and EPS Surprise

 

Dillard's, Inc. Price and EPS Surprise | Dillard's, Inc. Quote

Factors That Hold the Key to Dillard's Performance

Dillard’s positive surprise history is well supported by a robust comparable store sales (comps) trend as well as strong performances across most categories. The company has been witnessing higher comps, backed by exclusive merchandise offerings and robust store-growth efforts. It is also benefiting from growth opportunities in the e-commerce business, which should aid top and bottom-line outcomes in the upcoming quarterly release.

On the storefront, the company will gain from enhancing brand relations, focusing on in-trend categories and store remodels, and rewarding store personnel. Meanwhile, some of the strategies to boost the e-commerce business include the enhancement of merchandise assortments and effective inventory management. These efforts are poised to improve merchandise inventories in the to-be-reported quarter, which should aid margins as well.

However, increased markdowns have been denting the company’s margins and bottom-line growth. The persistence of these trends remains a threat to the bottom line in the fiscal first quarter. Stiff competition in the industry remains an added concern.

What Does the Zacks Model Unveil?

Our proven model predicts that Dillard's is likely to beat estimates in first-quarter fiscal 2019. This is because a stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dillard's Zacks Rank #3 and an Earnings ESP of +3.95% make us reasonably confident of an earnings beat in the first quarter of fiscal 2019.

3 Stocks With Favorable Combination

Here are three companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

The Children’s Place Inc. (PLCE - Free Report) has an Earnings ESP of +9.96% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corp. (TGT - Free Report) has an Earnings ESP of +0.42% and a Zacks Rank #2.

Dollar Tree Inc. (DLTR - Free Report) has an Earnings ESP of +0.51% and a Zacks Rank #2.

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