Dillard's (DDS) Solid 8.7% Net Margin Challenges Bearish Department Store Narratives

Dillard's (DDS) closed out FY 2026 with fourth quarter revenue of US$1,989.4 million and basic EPS of US$13.06, alongside net income of US$203.7 million. Earlier quarters showed revenue between US$1,490.97 million and US$1,546.97 million and EPS ranging from US$4.66 to US$10.39. Over the past year, the company reported trailing twelve month revenue of US$6.6 billion with basic EPS of US$36.32 and net income of US$570.2 million. These figures may prompt investors to focus closely on how margins are holding up across the chain.

See our full analysis for Dillard's.

With the headline numbers on the table, the next step is to set these results against the most common stories investors tell about Dillard's and assess which narratives the latest margins support and which they start to question.

Curious how numbers become stories that shape markets? Explore Community Narratives

8.7% Net Margin Shows Earnings Power Holding Steady

• Dillard's converted US$6.6b of trailing twelve month revenue into US$570.2 million of net income, which works out to an 8.7% net margin compared with 9.0% a year earlier.
• What stands out for a bearish narrative that worries about pressure on traditional department stores is that profitability remains solidly positive, with:
  • Basic EPS over the last twelve months at US$36.32, supported by quarterly EPS that ranged from US$4.66 to US$13.06 rather than swinging into losses.
  • Quarterly net income staying in the black between US$72.8 million and US$214.4 million across the periods shown, which challenges the idea that the business model is already breaking down.

Over the latest year of trading, skeptics may want to see sharper margin deterioration than the shift from 9.0% to 8.7% before leaning too heavily on a bearish long term story. 🐻 Dillard's Bear Case

Lower 16.3x P/E Versus Peers Creates A Valuation Gap

• Shares traded on a trailing P/E of 16.3x over the last year, below the peer average of 20.4x, the North American Multiline Retail industry at 18.9x, and the broader US market at 19.1x.
• Supporters of a more bullish angle often point to this discount, and the numbers give them some ammunition, with:
  • A trailing dividend yield of 5.24% alongside five year profit growth of 3.8% per year, which together paint a picture of a business that has produced consistent earnings and income for shareholders.
  • Revenue over the trailing twelve months at US$6.6b and net income of US$570.2 million, which underpin that P/E rather than relying on a single unusually strong period.

For investors who like income and lower P/E names, this mix of a 16.3x multiple and a 5.24% yield is likely to be central to any bullish case. 🐂 Dillard's Bull Case

DCF Fair Value Sits Below The US$595.88 Share Price

• A DCF fair value estimate of US$524.27 compares with the current share price of US$595.88, while analysts also expect earnings to decline about 3% per year and revenue to grow around 1.3% per year, below the 10.3% forecast for the US market.
• This creates a clear tension for investors trying to balance reward signals with caution, because:
  • The same dataset that flags a high 5.24% trailing dividend yield and a P/E below peers also indicates that the market price is above the DCF fair value and that earnings are forecast to shrink over the next three years.
  • Net margin of 8.7%, slightly softer than 9.0% a year earlier, suggests profitability is healthy but not widening, which aligns more with the muted 1.3% revenue growth forecast than with an aggressive growth story.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Dillard's's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

Seeing both the strengths and the watchpoints here, it is worth checking the full picture yourself and acting while the data is fresh. You can start with 2 key rewards and 1 important warning sign.

See What Else Is Out There

Dillard's mix of a share price above its DCF fair value, slightly softer margins, and muted revenue expectations may limit the upside some investors want.

If that leaves you looking for stronger value signals, you might want to quickly scan our 51 high quality undervalued stocks to spot companies where pricing looks more appealing right now.

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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