Shopping Center Anchor Stocks Could Break March Lows

Dillard’s, Inc. (DDS) report of the second quarter of 2020 earnings after Thursday’s closing bell, with analysts expecting a loss of $4.68 per share to $959.0 million in sales. The brick-and-mortar retailer charged higher, despite the display of an even greater a first quarter loss in May, with bottom fishers also ignoring 46.3% year-to-year decline in revenue. The stock has been removed from the index S&P MidCap 400 in June because it was in the mid-cap criteria, striking another blow to the once popular shopping center anchor.

Key Takeaways

  • Dillard’s market capitalization has dropped to a little over 600 million dollars.
  • Wall Street is strongly bearish on the long-term prospects, without the analysts of the publication “Buy” ratings.
  • Long-term techniques to warn that Dillard’s stock could eventually fall into the single digits.

The publication of the results will provide the first look at the battered group’s performance in the second quarter, with macy’s, Inc. (M), Kohl’s Corporation (KSS), and Nordstrom, Inc. (JWN) report in the coming weeks. The price action has been downright terrible in the last three months, with these questions hovering dangerously close to March’s multi-year low. Of course, their problems started well before the pandemic, with formerly loyal customers to abandon shopping centres in favour of the e-commerce and the major big box stores.

UBS downgraded macy’s and Kohl’s shares to “Sell” in July, adding to the pressure of the group. Wall Street consensus, now the rate of Dillard’s stock as a “Moderate Sell”, based on the zero to “Buy” a “Hold” and two “Sell” recommendations. The low number of analysts covering the stock highlights the fall from grace, with the current market capitalization of $623 million, dropping below the threshold of many investment houses. Price targets currently range from a low of $19 high Street of$ 26, while the stock will open Thursday’s session on $1 above the target.

A price target is an analyst’s projection of the future security price. Price targets can cover all types of securities, complex investment products to shares and bonds. When setting a share price target, the analyst is trying to determine what the stock is a value and where the price will be in 12 or 18 months. In the end, the course objectives depend on the valuation of the company as of the issuance of shares.

Dillard’s Long-Term Chart (1993 – 2020)

Dillard’s stock has broke above the 1993 top-down $50 in 2012 and entered a strong upward trend, which has posted a record high of $144.21 in 2015. The e-commerce boom then hit, taking market share from brick-and-mortar retailers at a rapid pace. The stock has responded to a sharp drop which has initially found support at the .618 retracement of the six years of the upward trend. The share price slid sideways in 2017 and is broken down, reducing the 200-month exponential moving average (EMA) before bouncing back in 2018.

The rally has stalled a three-year high in the middle of$90 in May 2018, leaving room for a pullback that found support for the state of baja to the summer of 2019. Bulls have taken control in the end of the year, but the stock made little progress, setting the stage for a February 2020 distribution that establishes a strong resistance in the low $50. Unfortunately for the bulls, a rebound in the second quarter quickly disappeared, leaving the death of the action of the price dangerously close to the first quarter of support.

The selloff to cut through the .786 retracement Fibonacci of the multi-year uptrend, while the rebound tested this level and reversed on heavy volume in June. This is extremely bearish because the harmonics of the brand zone, the last level of support, in advance of a 100% retracement to the low front. Looking back, the stock bottomed at $2.50 after the economic collapse of 2008, marking the starting point of the Fibonacci grid, and the power of the stomach churning of the decline of the target.

Fibonacci Retracement levels are horizontal lines that indicate where support and resistance are likely to occur. They are based on the Fibonacci numbers. Each level is associated to a percentage. The percentage is how much of before you move the price has retraced. The Fibonacci retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%. While officially is not a Fibonacci ratio of 50% is also used.

The Bottom Line

Dillard’s reports second quarter 2020 results on Thursday evening, after he failed to recover from the first quarter of sales. This sets a dangerously scenario downtrend, with a sell-the-news reaction to awareness of the odds of a breakdown in the single digits.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.


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