Should Value Investors Buy Dillard's (DDS) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is Dillard's (DDS). DDS is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.
Investors should also note that DDS holds a PEG ratio of 0.56. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DDS's PEG compares to its industry's average PEG of 0.76. Over the past 52 weeks, DDS's PEG has been as high as 0.78 and as low as 0.47, with a median of 0.65.
Another valuation metric that we should highlight is DDS's P/B ratio of 2.60. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 3.03. Over the past year, DDS's P/B has been as high as 2.73 and as low as 0.47, with a median of 1.32.
Finally, investors should note that DDS has a P/CF ratio of 6.39. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12. Over the past year, DDS's P/CF has been as high as 15.93 and as low as 4.60, with a median of 8.43.
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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Dillards, Inc. (DDS): Free Stock Analysis Report
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