Dillard's, Inc. (NYSE:DDS) shares fell 9.7% to US$58.78 in the week since its latest full-year results. Revenues were in line with forecasts, at US$6.3b, although statutory earnings per share came in 10% below what analysts expected, at US$4.38 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, Dillard's's three analysts currently expect revenues in 2021 to be US$6.25b, approximately in line with the last 12 months. Statutory earnings per share are forecast to drop 14% to US$3.76 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$6.42b and earnings per share (EPS) of US$4.50 in 2021. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
It'll come as no surprise then, to learn that analysts have cut their price target 7.3% to US$58.29. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Dillard's, with the most bullish analyst valuing it at US$80.00 and the most bearish at US$36.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
In addition, we can look to Dillard's's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. One thing that stands out from these estimates is that, even though revenues are forecast to keep falling, the decline is expected to accelerate. Analysts have modelled a 1.5% decline next year, compared to a historical decline of 1.2% per annum for the past five years. Compare this with our data on other companies (with analyst coverage) in a similar industry, which in aggregate are forecast to see their revenue decline 4.2% per year. It seems clear that while revenues are expected to continue declining, analysts also expect the downturn to be more severe than that of the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Dillard's. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Dillard's analysts - going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Dillard's's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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