Dillard's (DDS): Evaluating Valuation Following Q2 Results and Renewed Investor Confidence

Dillard's (DDS) grabbed investor attention with its Q2 2025 results, reporting total retail sales up 1% and notable gains in juniors’, children’s apparel, and ladies’ accessories. The retailer’s ongoing share repurchases and strategic moves are also turning heads.

See our latest analysis for Dillard's.

Following a record-setting 52-week high and positive momentum in the second quarter, Dillard’s share price has edged higher for most of 2024. This trend reflects renewed optimism around its store remodels, omni-channel investments, and fresh partnerships. Over the past five years, total shareholder return stands at a solid 13.3%, signaling steady long-term value alongside more modest recent gains.

If these steady gains and strategic moves pique your interest, consider broadening your search and discover fast growing stocks with high insider ownership.

Given these gains and the stock’s surge to all-time highs, the real question is whether Dillard’s current valuation leaves room for further upside or if the market has already priced in future growth potential.

Price-to-Earnings of 16.7x: Is it justified?

Dillard’s current share price implies a price-to-earnings (P/E) ratio of 16.7x, positioning the stock below both the US market average of 19.3x and the peer group average of 25.4x. This relative discount is notable, given the stock’s sharp run-up and recent outperformance.

The price-to-earnings ratio is a key yardstick in retail as it reflects how much investors are willing to pay for each dollar of current earnings. A lower ratio often suggests the market expects slower earnings growth, more volatility, or less confidence in future results compared to peers.

Compared to both industry averages and the global multiline retail sector average of 21.8x, Dillard’s appears attractively valued. However, its P/E still stands above what our fair value model suggests is justified, which is 10.2x. This indicates that recent optimism may come at a premium and there could be scope for the market to adjust in that direction.

Explore the SWS fair ratio for Dillard's

Result: Price-to-Earnings of 16.7x (UNDERVALUED)

However, recent declines in annual revenue and net income growth could affect sustained momentum if not reversed in upcoming quarters.

Find out about the key risks to this Dillard's narrative.

Another View: SWS DCF Model Poses a Challenge

While Dillard’s price-to-earnings ratio looks reasonable compared to the wider market, the SWS DCF model tells a different story. It estimates fair value at $564.84, around 9% below the current share price. This suggests the stock could be overvalued if these cash flow forecasts prove accurate. Does this signal caution or opportunity for investors?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Dillard's for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Dillard's Narrative

Whether you have a different view or want to take a hands-on approach with the numbers, it’s quick and easy to build your own perspective. Just Do it your way.

A great starting point for your Dillard's research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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