• If you are wondering whether Dillard's current share price reflects its true worth, this article walks through what the numbers are really saying about valuation.
• The stock most recently closed at US$576.84, with returns of 1.7% over 7 days, a 5.0% decline over 30 days, a 9.4% decline year to date, and a 65.6% gain over the past year.
• Recent coverage has focused on Dillard's share price performance and how it compares with the wider Multiline Retail industry. This gives investors more context around the strong multiyear return of roughly 7x. Commentators have also highlighted that the stock continues to attract attention after a very large 5 year gain.
• Dillard's currently has a valuation score of 2 out of 6. The next sections look at what different valuation approaches suggest about that score and conclude with a way to tie these methods together for a fuller view of value.

Dillard's scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Dillard's Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and discounting them back to today’s value using a required rate of return.

For Dillard's, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is $608.6 million, and the forecast set includes a specific projection of $582 million in free cash flow for 2028. Beyond the near term, Simply Wall St extends the estimates out to 2035 using the provided ten year cash flow projections in millions of dollars.

Adding up these discounted cash flows results in an estimated intrinsic value of about $439.38 per share. Compared with the recent share price of $576.84, the DCF output suggests Dillard's trades at roughly a 31.3% premium to this intrinsic value. On this model alone, that indicates the stock is overvalued.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Dillard's may be overvalued by 31.3%. Discover 63 high quality undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Dillard's.

Approach 2: Dillard's Price vs Earnings

For a profitable company like Dillard's, the P/E ratio is a useful way to connect what you pay per share with the earnings the business is currently generating. In general, higher expected growth and lower perceived risk can justify a higher P/E, while lower growth expectations or higher risk usually align with a lower, more cautious P/E level.

Dillard's currently trades on a P/E of 15.8x. That sits below the Multiline Retail industry average P/E of 19.8x and also below the peer group average of 16.7x. On simple comparisons, the stock looks cheaper than both its broader industry and its closer peer set on an earnings basis.

Simply Wall St's Fair Ratio adds another layer. It is a proprietary P/E estimate that reflects factors such as earnings growth, profit margins, industry, market cap and risk. Because it adjusts for these company specific features, it can be more informative than a straight peer or industry comparison. For Dillard's, the Fair Ratio is 12.7x, which is below the current P/E of 15.8x, suggesting the shares trade above this adjusted earnings based estimate.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Dillard's Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives bring this to life by letting you set a story for Dillard's, including your view on fair value and your own expectations for future revenue, earnings and margins. They then tie that story to a forecast and a fair value that can be compared with the current share price on Simply Wall St's Community page, where Narratives are available to millions of investors and automatically refresh as new information such as company news or earnings is incorporated. One investor might build a Narrative that supports a very optimistic fair value for Dillard's, while another sets a much more cautious figure based on the same disclosure and market data.

Do you think there's more to the story for Dillard's? Head over to our Community to see what others are saying!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.