By
Brian D. Pacampara
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More Articles
February 28, 2011
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Based on the aggregated intelligence of 170,000-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 and see what CAPS investors are saying about the stock right now.
Dillard's facts
| Headquarters (founded) |
Little Rock, Ark. (1938) |
| Market Cap |
$2.52 billion |
| Industry |
Department stores |
| Trailing-12-Month Revenue |
$6.25 billion |
| Management |
Chairman / CEO William Dillard II
CFO James Freeman |
| Return on Equity (average, past 3 years) |
0.4% |
| Cash / Debt |
$343.3 million / $960 million |
| Competitors |
J.C. Penney (NYSE: JCP )
Kohl's (NYSE: KSS )
Macy's (NYSE: M ) |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 64% of the 373 members who have rated Dillard's believe the stock will underperform the S&P 500 going forward. These bears include Dormin111ob and All-Star kurtdabear, who is ranked in the top 15% of our community.
Late last month, Dormin111ob listed several of the stock's negatives: "Just had a big run up, small profit margin, stagnating (slightly declining) revenues, and sitting under a big pile of debt."
In fact, Dillard's sports a rather anemic three-year average operating margin of 2.1%. That's lower than that of department store foes J.C. Penney (4.9%), Kohl's (9.9%), and Macy's (6.5%).
CAPS All-Star kurtdabear touched on the stock's seemingly unsustainable price run:
[Dillard's] should peak any day now as reality lets the steam out of the government's current "We're in a recovery!" propaganda campaign. Discretionary spending is rapidly becoming impossible for tens of millions of Americans and is being viewed as unfashionable by millions more. If you're financially suicidal, by all means buy home builders and dept. stores. Otherwise, leave them alone for a while--say maybe 10 years or so.
What do you think about Dillard's, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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