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Dillard's (DDS) Surges 22.8%: Is This an Indication of Further Gains?

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Dillard's (DDS) shares rallied 22.8% in the last trading session to close at $125.35. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 6.6% gain over the past four weeks.

Dillard’s stock moved higher on better-than-expected first-quarter fiscal 2021 sales and earnings owing to the acceleration of the vaccination program, increase in stimulus checks and favorable weather. Also, the quarter marked record performances in gross margin and adjusted earnings. Moreover, enhanced inventory, reduced costs and strong liquidity contributed to quarterly growth. Additionally, management approved a new share repurchase program, to buy back up to $500 million of Class A common stock. Also, the board has announced its 209th successive quarterly dividend of 15 cents per share on the class A and class B common stock, which is payable on Aug 2, 2021 to shareholders with record as on Jun 30.

The company reported earnings of $6.37 per share beat the Zacks Consensus Estimate of $1.20 and marked a substantial growth from a loss of $6.94 in the prior-year quarter. Net sales of $1,329 million surged 69% from the prior-year quarter and exceeded the Zacks Consensus Estimate of $1,211 million.

Price and Consensus

Price Consensus Chart for DDS
Price Consensus Chart for DDS

This department store operator is expected to post quarterly loss of $0.88 per share in its upcoming report, which represents a year-over-year change of -137.84%. Revenues are expected to be $1.27 billion, up 38.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Dillard's, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on DDS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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