Value
6.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.1 |
| EV/EBITDA | 5.5 |
| Fwd P/E | 6.9 |
| PEG | 9.8 |
| Analyst target | 3.0 |
- ▸Forward P/E: 18.5x
- ▸PEG: 0.54
DDS · Why this verdict
Why Dillard's (DDS) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.8/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Dillard's has delivered four consecutive earnings beats at an average surprise above 28%, and its shares trade at a forward multiple of roughly 16.6 times with a PEG below 0.35—a combination that keeps valuation attractive even as price momentum has softened and the stock sits in a range-bound pattern with a high short-interest overhang.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten consensus estimates in each of the past four quarters by an average of 28 percentage points, suggesting management consistently under-promises and over-delivers on profitability. Catalyst breakdown | EPS surprise percentage remains positive and averages above 10% over the next four reported quarters. | →Stable |
| CounterThe beat streak may reflect a low-ball consensus baseline rather than genuine operating acceleration; if sell-side estimates reset higher, the margin of outperformance could compress sharply and disappoint investors accustomed to large beats. | ||
The company earns a return on equity of 34%, scores a perfect 9 out of 9 on the Piotroski financial health screen, and converts roughly 78% of net income into free cash flow, indicating a financially sound business generating real cash. Quality breakdown | Return on equity stays above 25% and Piotroski score remains at 7 or higher for the next two annual reporting periods. | →Stable |
| CounterReturn on equity elevated by a shrinking equity base from share buybacks can flatter the profitability picture; if buyback activity slows or the balance sheet deteriorates, the headline ROE would decline without any improvement in underlying operating returns. | ||
At a forward price-to-earnings ratio near 16.6 times and a PEG below 0.35, the stock screens as attractively valued relative to its earnings growth rate, offering a potential margin of safety for patient buyers. Valuation breakdown | Forward P/E contracts below 14 times or PEG remains under 0.50 as earnings grow over the next 12 months. | →Stable |
| CounterA low multiple in a department-store operator can be a value trap if consumer spending softens; the stock's rich valuation relative to analyst price targets—where the consensus target already trails the current price—suggests the market may be correctly skeptical of future growth. | ||
Short interest sits at 33% of float, creating a meaningful technical overhang that has contributed to price weakness and keeps momentum in negative territory, with on-balance volume trending down. Key risks | Short interest as a percentage of float declines below 20% over the next 12 months, reducing the technical headwind on price. | ↑Improving |
| CounterA sustained short position of this size at a quality-scoring business with a strong Piotroski result could rapidly reverse into a squeeze if a catalyst emerges—the bear case assumes the shorts are right about deteriorating fundamentals, which the earnings record has not yet confirmed. | ||
The company has beaten consensus estimates in each of the past four quarters by an average of 28 percentage points, suggesting management consistently under-promises and over-delivers on profitability.
→StableCatalyst breakdown
- Expectation
- EPS surprise percentage remains positive and averages above 10% over the next four reported quarters.
CounterThe beat streak may reflect a low-ball consensus baseline rather than genuine operating acceleration; if sell-side estimates reset higher, the margin of outperformance could compress sharply and disappoint investors accustomed to large beats.
The company earns a return on equity of 34%, scores a perfect 9 out of 9 on the Piotroski financial health screen, and converts roughly 78% of net income into free cash flow, indicating a financially sound business generating real cash.
→StableQuality breakdown
- Expectation
- Return on equity stays above 25% and Piotroski score remains at 7 or higher for the next two annual reporting periods.
CounterReturn on equity elevated by a shrinking equity base from share buybacks can flatter the profitability picture; if buyback activity slows or the balance sheet deteriorates, the headline ROE would decline without any improvement in underlying operating returns.
At a forward price-to-earnings ratio near 16.6 times and a PEG below 0.35, the stock screens as attractively valued relative to its earnings growth rate, offering a potential margin of safety for patient buyers.
→StableValuation breakdown
- Expectation
- Forward P/E contracts below 14 times or PEG remains under 0.50 as earnings grow over the next 12 months.
CounterA low multiple in a department-store operator can be a value trap if consumer spending softens; the stock's rich valuation relative to analyst price targets—where the consensus target already trails the current price—suggests the market may be correctly skeptical of future growth.
Short interest sits at 33% of float, creating a meaningful technical overhang that has contributed to price weakness and keeps momentum in negative territory, with on-balance volume trending down.
↑ImprovingKey risks
- Expectation
- Short interest as a percentage of float declines below 20% over the next 12 months, reducing the technical headwind on price.
CounterA sustained short position of this size at a quality-scoring business with a strong Piotroski result could rapidly reverse into a squeeze if a catalyst emerges—the bear case assumes the shorts are right about deteriorating fundamentals, which the earnings record has not yet confirmed.
Per-dimension breakdown
Quality
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 7.6 |
| Gross margin | 4.1 |
| Op margin | 2.4 |
| Net margin | 5.2 |
| Current ratio | 10.0 |
| FCF quality | 4.3 |
| Moat | 6.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 34%
- ▸Earnings quality warning: 54% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
5.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.4 |
| EPS growth | 8.9 |
- ▸Declining revenue: -0%
Momentum
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.2 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 1.1 |
- ▸Overbought (RSI 77)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 2.7 |
| erm sentiment | 5.0 |
- ▸Below analyst target
Insider
6.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| holder change | 6.5 |
| notable moves | 7.0 |
- ▸Share-count fallback (no $ value): net -400.0 shares
Peer rank
4.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.0 |
| quality rank | 7.1 |
| growth rank | 2.5 |
Technical
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.6 |
| support resistance | 0.5 |
| 52w position | 8.4 |
Risk (lower is worse)
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 10.0 |
| days to cover | 3.8 |
| volatility | 3.3 |
| beta | 6.3 |
| debt equity | 9.1 |
- ▸Short squeeze setup: 29% short, quality 7.5
Catalyst
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.5 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.9>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:69d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-2.0=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.98
Upside
-28.9%
Downside
14.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-2.0=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.98 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 7.1, Momentum at 6.9, and Value at 6.7; the weakest are Technical at 3.5, Peer rank at 4.1, and Sentiment at 4.3. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -1.98 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Outperformance
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Attractive Valuation Low Peg
Trip ifForward P/E expands above 22 times without a corresponding increase in earnings estimates.
- P3High Short Interest Overhang
Trip ifShort interest rises above 40% of float for 2 consecutive months.
- P4Quality Balance Sheet Returns
Trip ifPiotroski F-Score drops below 6 out of 9 in any reported period.