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Should Value Investors Buy Dillard's (DDS) Stock?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Dillard's (DDS). DDS is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

DDS is also sporting a PEG ratio of 0.69. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DDS's industry has an average PEG of 1.03 right now. Within the past year, DDS's PEG has been as high as 0.69 and as low as 0.47, with a median of 0.61.

Another valuation metric that we should highlight is DDS's P/B ratio of 2.52. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.71. Within the past 52 weeks, DDS's P/B has been as high as 2.58 and as low as 0.38, with a median of 0.98.

Finally, we should also recognize that DDS has a P/CF ratio of 8.69. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. DDS's P/CF compares to its industry's average P/CF of 10.75. Over the past 52 weeks, DDS's P/CF has been as high as 15.93 and as low as 4.47, with a median of 7.93.

Value investors will likely look at more than just these metrics, but the above data helps show that Dillard's is likely undervalued currently. And when considering the strength of its earnings outlook, DDS sticks out at as one of the market's strongest value stocks.


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