Dillard’s (NYSE: DDS) soared 22% on Tuesday morning, after the company posted earnings that beat Wall Street expectations.
However, the stock is now in a resistance zone and we expect it to fail in the coming months.
The company reported earnings per share of $3.22 and total revenue of $2.06 billion, compared to analyst estimates of $2.66 and $2.03 billion. Same store sales increased by 2%, above the consensus of 0.5%.
CEO William Dillard explained that, “Our 2 percent comparable store sales increase for 2018 is comprised of four quarters of positive sales. We also held retail gross margin and operating expenses flat as a percent of sales.”
Nonetheless, we remain cautious, as this rally has taken DDS into a big resistance zone. While our review of the stock’s market cycles shows it is still in a rising phase, the close of this cycle is drawing near.
We expect the rally to fail soon, falling back to near $70 by June.
Dillard’s (DDS) Stock Weekly Chart
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