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, the departmental store chain is likely to continue witnessing a year-over-year decline in the bottom line when it reports second-quarter fiscal 2019 numbers.
In the last reported quarter, the Arkansas-based company’s earnings were in line with estimates, even though the bottom line declined on a year-over-year basis. Notably, it delivered average four-quarter positive earnings surprise of 9.7%.
Coming to projections for the quarter under review, we note that the Zacks Consensus Estimate for the company’s earnings is pegged at loss of 63 cents, which is significantly wider than loss of 10 cents reported in the year-ago period. Notably, the loss estimate has further widened in the past 30 days. For revenues, the consensus mark stands at $1.48 billion, suggesting nearly 1.6% decline from the year-ago quarter.
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’s comps are benefiting from exclusive merchandise offerings and robust store-growth efforts. It is also benefiting from growth opportunities in the e-commerce business, which should continue to reflect on top and bottom-line gains 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 will reflect in Dillard’s 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 second quarter. Stiff competition in the industry remains an added concern.
What Does the Zacks Model Unveil?
Our proven model does not clearly predict that Dillard's is likely to beat estimates in second-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 has a Zacks Rank #3 and an Earnings ESP of -24.74%. While the Zacks Rank increases the company’s chances of beating estimates, a negative ESP makes surprise prediction difficult.
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:
Target Corp. (TGT - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Macy's, Inc. (M - Free Report) has an Earnings ESP of +0.73% and a Zacks Rank #3.
The Children’s Place Inc. (PLCE - Free Report) has an Earnings ESP of +47.06% and a Zacks Rank #3.
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