This stock has been left behind in the most recent rallies on Wall Street. That is unusual when you sit down and parse out the revenue, earnings and profits. Check out what Dillards has to offer your portfolio. This is a real hidden gem with a lot of long term potential.
You can tell a lot about a car just by looking under the hood. Well, that may have been the case long before the modern cars of today when you consider how the engine appears to be buried under some huge cover. Now, you really have to do some digging around to get to see what is really going on.
Dillard’s is almost like a car in that regards. You know it is a retailer. We have all heard of it, even if we have not had the fortune of walking into one of these stores. After doing a healthy sifting around this company popped up in my screener. I had seen it before but passed. Now, after digging around, looking beyond the hood, if you will, I think I have found something very enticing.
Here is the company’s basic financials from the past several years to include revenue, operating profits and earnings per share.
2011: $6,399.80 $473.50 $8.67
2012: $6,751.60 $550.60 $6.98
2013: $6,691.80 $553.70 $7.10
2014: $6,780.10 $569.20 $7.79
2015: $6,754.50 $466.70 $6.91
Honestly, I almost fell asleep when I saw these numbers. Consistent. Steady. Unremarkable.
Mind you, there is nothing wrong with that. In fact, I would much prefer that kind of company when it comes to adding something into my portfolio. But, before I add something into my portfolio, and after I have seen the numbers, I want to know what I am about to pay for this company. That is when things went from boring to really interesting.
Dillard’s is trading at $65 per share. Last year’s earnings per share came in at the above mentioned $6.91. That means the company is trading at less than 10-times earnings. So, what I am seeing si the potential to get a consistently earning company with consistent earnings - a small amount of long term debt - at a price that gets me about 10% return on an annual basis. Sign me up.
Mind you, there must be some kind of catch. I could not readily find one. In fact, I started to consider the other side of “catch” and look at the fundamentals. For instance, retail sales numbers were released the past few days for the United States. There was an improvement in the year-over-year numbers from 3.8% to 4.1%. What is happening is that consumers are earning more and more, and I expect that trend to improve significantly over the next several years. And, with those improved earnings, these same consumers are spending more and more at shopping malls and department stores. The economic position for Dillards is looking brighter, and that brighter analysis is coming from a position of doing very well to begin with.
As I said, I sort of like boring and predictable when it comes to adding a company into my portfolio. I will pass on exhilarating. I think Dillards qualifies as boring and predictable. Predictably, the company can print profits and earnings with the same speed at which they are doing so. This makes this company more like an energy company in a lot of ways. From here, however, I also see potential for growth with the expansion of the economy. That growth potential will translate into revenue growth and earnings growth. That will propel the company’s stock forward. The current less-than 10-times earnings ratio is low and I expect that to turn significantly. In fact, if the company were to be merely average, trading at 15-times earnings, this stock would be trading above $100 per share, a nearly 50% return.
I am going shopping. Dillard’s has made my list of things to buy.
|This article from Macroaxis published on 19 of January contributed to the next trading period price escalation.The overall trading delta to the next next day price was 1.69% . The overall trading delta when the story was published to current price is 27.65% .|