Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Friday, UBS analyst Mauricio Serna adjusted the price target for Dillard’s Inc. (NYSE: NYSE:DDS) stock, increasing it slightly from $200.00 to $202.00, while reiterating a Sell rating on the shares. The stock, currently trading at $392.61, has fallen over 17% in the past week. According to InvestingPro analysis, the stock appears slightly overvalued at current levels. The revision comes as Serna anticipates ongoing structural challenges for the retailer, which he believes will continue to affect its sales and profit margins.
Serna’s assessment points to Dillard’s facing persistent market share losses to competitors with more attractive value propositions. Despite maintaining strong financial health with more cash than debt and a healthy current ratio of 2.84, these losses are expected to exert pressure on the company’s sales figures and margins. The analyst underscored the market’s potential underestimation of the impact these headwinds could have on Dillard’s earnings.
The company’s recent financial performance seems to support UBS’s cautious stance. With a gross profit margin of 40.5% and revenue declining 4.13% over the last twelve months, Dillard’s reported softer-than-expected comparable store sales for the fourth quarter, along with an acceleration in year-over-year gross margin pressures. These results appear to reinforce the long-term bearish outlook held by UBS.
Looking ahead, UBS forecasts a negative 5-year earnings per share compound annual growth rate (CAGR) of 13% for Dillard’s. This projection is based on the expectation that continuous declines in EPS will lead the stock toward the newly set $202 price target. While the company maintains a strong dividend track record, having paid dividends for 54 consecutive years, Serna noted a perceived risk-reward skew of 1:2, suggesting that potential upsides are outweighed by the downsides for the stock. Discover more valuable insights and 10 additional ProTips for Dillard’s with InvestingPro.
In other recent news, Dillard’s Inc. reported fourth-quarter earnings that exceeded analyst expectations, with earnings per share reaching $13.48 compared to the consensus estimate of $9.35. The company also posted revenue of $2.02 billion, surpassing the anticipated $1.95 billion. However, the quarter saw a decline in gross margins to 36.1% from 37.7% in the previous year, and total retail sales decreased by 1% on a comparable basis. Dillard’s also announced a quarterly dividend of $0.25 per share, scheduled for payment in early May to shareholders on record by the end of March.
Analyst firm CFRA raised its price target for Dillard’s shares to $420, maintaining a Hold rating, citing improved operating efficiencies and capital return programs. The firm’s analyst, Zachary Warring, also adjusted the fiscal year 2026 earnings per share estimate to $35.00. Despite these positive earnings results, comparable store sales fell by 1% year-over-year, with inventory levels increasing by 7% compared to the previous year. The performance in the Home & Furniture and Ladies Apparel segments was weaker, contributing to a decline in gross margins. Dillard’s continues to manage its selling, general, and administrative expenses, which remained steady at 22.4% of revenues.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.