1-Star Stocks Poised to Plunge: Dillard's?

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Based on the aggregated intelligence of 140,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, department store operator Dillard's (NYSE: DDS) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Dillard's business and see what CAPS investors are saying about the stock right now.

Dillard's facts

Headquarters (Founded)	Little Rock, Ark. (1938)
Market Cap	$1 billion
Industry	Department stores
Trailing-12-Month Revenue	$6.59 billion
Management	Chairman / CEO William Dillard, II CFO James Freeman
Trailing-12-Month Return on Equity	(9.6%)
Year-to-Date Return	248%
Cash / Debt	$116.9 million / $1.07 billion
Competitors	Macy's (NYSE: M) J.C. Penney (NYSE: JCP) Kohl's (NYSE: KSS)
CAPS Members Bearish on DDS Also Bearish on	Hovnanian Enterprises (NYSE: HOV)
CAPS Members Bullish on DDS Also Bullish on	Citigroup (NYSE: C) Bank of America (NYSE: BAC)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 68% of the 328 members who have rated Dillard's believe the stock will underperform the S&P 500 going forward. These bears include All-Star jemsa, who is ranked in the top 15% of our community, and iddqkfyou.

Just a couple of months ago, jemsa warned Fools that Dillard's valuation "has run-up too far." Our CAPS All-Star concludes: "The stock price ought to tumble as investors rotate out of the retail and consumer sectors."

In a pitch from one month earlier, iddqkfyou also thinks the stock is all worn out:

[Dillard's] seems to be the worst of the bunch. Not only is revenue down this year by 13%, but they were already losing money even before our consumer based debt machine had its heart attack.

They seem to be closing stores by the month, which, along with aggressive inventory and cost reduction, could do them wonders in the short-term; I expect that this is what accounts for the rally recently, but investors are soon going to be greatly disappointed when they realize that real growth is never going to return. Dillard's is trading for the same price as it was BEFORE this crisis hit pub[l]ic consciousness last year. Either someone knows something else important, or this is a perfect case of over-exuberant optimism.

What do you think about Dillard's, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. The CAPS community is waiting to hear your opinions. CAPS is 100% free, so get started!