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Here's How Dillard's (DDS) is Placed Ahead of Q4 Earnings

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Dillard’s, Inc. (DDS - Free Report) is expected to continue registering a year-over-year decline in the bottom line when it reports fourth-quarter fiscal 2019 numbers. Notably, higher markdowns and operating expenses have affected its earnings to decline on a year-over-year basis over the past few quarters. 

However, we note that in the trailing four quarters, the company’s bottom line outperformed the Zacks Consensus Estimate by 7.7%, on average.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $2.99 per share, suggesting a decrease of 7.1% from $3.22 reported in the year-ago quarter. However, the consensus mark has moved up by 2 cents in the past 30 days. Notably, the Zacks Consensus Estimate for revenues is pinned at $2,000 million, indicating a 0.5% dip from the year-ago quarter figure.

Dillard's, Inc. Price and EPS Surprise


Key Factors to Note

Dillard’s has been grappling with elevated SG&A and retail operating expenses, which might affect the company’s bottom line in the fourth quarter. Moreover, it has been exposed to fluctuations in raw material prices. Apart from this, intense competition in the industry has been concerning.

Nevertheless, the company has been gaining from its focus on increasing productivity at existing stores, developing a leading omni-channel platform and enhancing domestic operations. Its strategies like the enhancement of merchandise assortments and effective inventory management have been acting as growth drivers for its e-commerce business. The strategies have collectively been aiding the company’s comparable sales (comps).

Further, increased focus on offering fashionable products and impressive customer care service bode well. We believe that the company’s strategy of offering fashion-forward and trendy products has been instrumental for attracting more customers.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Dillard’s this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Dillard’s carries a Zacks Rank #1, its Earnings ESP of -6.20% 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:

Costco Wholesale Corporation (COST - Free Report) presently has an Earnings ESP of +0.56% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Casey’s General Stores (CASY - Free Report) currently has an Earnings ESP of +3.45% and a Zacks Rank #3.

Dollar Tree (DLTR - Free Report) currently has an Earnings ESP of +1.00% and a Zacks Rank #3.

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