On Tuesday, Dillard's Inc. (NYSE:DDS) experienced an upward revision in its price target from CFRA, a notable increase to $500 from the previous $485, while the firm sustained a Buy rating on the stock.
The adjustment comes in light of Dillard's posting normalized fourth-quarter earnings per share (EPS) of $15.44, surpassing the consensus estimates by $2.64, on revenues of $2.16 billion, which is marginally above the anticipated figures.
The new 12-month price target set by CFRA is based on a 12.5 times multiple of the forecasted fiscal year 2025 (ending January) EPS, a conservative figure compared to Dillard's 5-year average forward price-to-earnings (P/E) multiple of 16.4 times.
CFRA also increased its fiscal year 2025 EPS estimate for Dillard's by $5.00, reaching a new target of $40.00, and initiated a fiscal year 2026 EPS estimate at the same level.
Dillard's reported a 5% year-over-year decline in fourth-quarter comparable store sales, while retail gross margin experienced a compression of 100 basis points, settling at 37.7%.
The company indicated that while there was a modest increase in retail gross margin for home and furniture, it was overshadowed by declines in men's and children's apparel. Moreover, Dillard's distributed a substantial special dividend of $20 per share during the quarter.
CFRA lauds Dillard's capital return program as one of the best among retailers and highlights the company's strong balance sheet as the finest amongst department stores. The firm's bullish stance on Dillard's is reinforced by the retailer's efficient operations and its robust capital return strategy.
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