Dillard's Pre-Q4 Earnings: Is it Wise to Buy the Stock Before Results?

Core Insights - Dillard's, Inc. (DDS) is anticipated to experience a year-over-year decline in earnings for the fourth quarter of fiscal 2025, with a revenue estimate of $2.02 billion reflecting a slight growth of 0.16% compared to the previous year, while earnings per share are projected to drop by 26% to $9.98 [1][8]. Financial Performance - In the last reported quarter, Dillard's achieved an earnings surprise of 29.2%, and over the trailing four quarters, the company has averaged a 26.5% beat against the Zacks Consensus Estimate [2]. - The company expects SG&A expenses to rise by 4.8% year-over-year for the fiscal fourth quarter, with the SG&A expense rate projected to increase by 120 basis points to 23.2% [6]. Growth Drivers - Dillard's fourth-quarter results are expected to benefit from growth initiatives and effective execution, particularly in brick-and-mortar stores and e-commerce, which are aimed at retaining existing customers and attracting new ones [3][4]. - The company has been enhancing its customer base through store improvements, better brand partnerships, and trend-focused assortments, which are anticipated to support flat year-over-year comparable-store sales [3][4]. Challenges - The company is facing challenges from a tough retail environment characterized by cautious consumer spending and increased operating expenses due to higher payroll costs and investments in store personnel [5]. - These factors are likely to negatively impact margins and the bottom line for the fiscal fourth quarter, with a predicted 16.1% decline in operating profit and a 190-basis point contraction in operating margin [5][6]. Valuation and Market Performance - Dillard's is currently trading at a forward price-to-earnings ratio of 20.82X, which is above the industry average of 14.71X and its five-year median of 13.14X [8][9]. - Over the past three months, Dillard's shares have increased by 7.6%, compared to a 10.6% growth in the industry [10].