Your $50-Dillard's Reward-Points are Now-Ready! Please make sure that you redeem these-points before they expire-on Friday, April 7th, 2017 at the end of the day.
This reward-is our way of saying " thank you" for all of your many years of loyal-business. All that you need to do to get your reward today is go below here and answer a brief-survey about your experience shopping-at Dillard's.
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Dillard's Inc. (NYSE:DDS) looks appealing on a medium-term horizon based on its nearly $10/share annual free cash flow and shrinking share count. The Board announced a new $500M buyback authorization during Feb of 2016 on the heels of the completion of their previous $500M buyback program who's limit was used up during the 4th Quarter 2015. This is an extension of a long period of buybacks by the company which have shrunk shares outstanding by 25 since 2014. A big rally from 2014-2015 plateaued and the ensuing crash has led the stock into a deep price trough. It hasn't helped any that the market is generally pessimistic about big department store operators. This tough time for many shareholders may be a good opportunity to pick up some shares. Why is this possibly a buying opportunity? Because if the company continues to withstand the onslaught of the internet and earnings hold-up, today's price for DDS' projected cash flows is at 86 of the FI DCF Model's fair value even when fair value is calculated using a negative growth scenario, with a dollar-and-cents valuation based on shrinking free cash flows over the next five years (the DCF Model's Proj. Free Cash Flow is displayed in the appendix of this article). Valuation The company is trading at 5X price to free cash flow. This is far below DDS' peak and evidently bubble-like valuation of ~14X price to free cash flows reached during December 2015. The company looks on course to continue achieving solid incomes going forward. Nonetheless, a sign of potential danger: Historically, the company has had several years of negative free cash flow during the last ten years. To DDS' credit, the company has been steadily cash flow positive for seven years in a row. If they maintain this earnings streak and earn a similar magnitude of free cash flow during the coming years I believe the market will reward this company with a higher price per share. Considering the volume of their reported free cash flows, the company can afford to pay a huge dividend (measuring to 11 annual yield at today's price), and still continue operating. Instead of a dividend, management is buying back stock, which is also a valid way to return capital to shareholders. I believe management's continued buybacks will contribute to a substantial price rally during the next 18 months, a rally in-line with previous experience showing regular 10 bumps in the price per share even as the stock has languished in the $56 - $83 range since January 2016. DDS's further success depends on healthy consumer spending, so if there is recession on Main Street the company's earnings won't measure up to projections. The company's stock isn't a necessarily a bargain because there is little or zero growth in this department store's revenue. Today's price appears to expect another market disaster such as the global financial crisis of '08, and such a combination of a slowdown in consumer spending and general stock market hazard could crush today's price by 50. A risk of such large losses - and no guarantee of recovery - leads many investors to completely ignore the retail sector. Final Word DDS is offering investors an opportunity to buy substantial cash flows at a low price relative the wider stock market's valuations. But a history which includes several years of negative free cash flows is somewhat unnerving. I'm cautiously optimistic about DDS and if they continue to post good results I expect buybacks to help the market move this stock's price into the less pessimistic valuation of 7.5X price to free cash flow. Compared to today's price multiple of 5.04X, a move to a peer-comparable 7.5X multiplier gives us a target price per share of $84.58 by the time 2022 comes around, five years from now. The first time I heard about the Dillard's Clearance Store was ironically from a news anchor who had moved to the area from Atlanta. He told me that he always got incredible deals on high quality shirts. His wife and kids also found great deals there too. I'm usually pretty loyal to the Gap Clearance Center in Hebron but the Dillard's Clearance Center could be a close second or eventual tie. The Clearance Store is basically a former Dillard's department store dedicated to only clearance items which means that you have two floors full of deals. Women will find the most options for clothes and shoes but Men still have a decent sized section too. During my visit I found formal dresses for $9.99 than they were reduced even more with another sale on top of that to make them $1.99 Less than the cost of a value meal for a formal dress! I immediately thought that I should share the deal so that people could help restock Cinderella's Closet in a budget friendly way. I also thought that if I was going to share that information I should also lead by example and buy some dresses for the cause. When it comes to upscale department stores, I typically do a lot of window shopping, but not a lot of actual buying. However, that's definitely not the case with Dillard's! Although they're considered an upscale store that carries designer brands such as Coach, Betsey Johnson and Michael Kors, there are always bargains to be found. In fact, I rarely come out of Dillard's empty handed! If you're planning on hitting your nearby Dillard's in the near future, check out these six ways to get even more for your money. If you and the associates at your local Dillard's are on a first name basis, it might be time to consider signing up for a Dillard's. Dillard's offers two credit card options? the Dillard's Card and the Dillard's Elite Card. Both cards reward you with 2 points for every dollar spent at Dillard's, which can be redeemed for a $10 reward card or a 10 off shopping pass for every 1,500 points. However, the Dillard's Elite Card? which is issued by American Express? can be used anywhere Amex is accepted and garners even more points. With the Elite card, shoppers will also earn 2 points on gas and groceries and 1 point on everything else. The Elite card also offers free shipping on Dillards.com and free gift wrap in stores. If that's not enough to get you interested, the Elite Card offers one additional and pretty spectacular reward. Cardholders who reach $5,000 in annual purchases will receive their choice of a travel, golf, or spa getaway! Now that's worth shopping for |
