If a corporate insider is spending millions on company stock, it’s often worth taking a closer look. Insiders are some of the most informed participants in the market, and their trades can provide valuable investment insights.
In this report, we are going to highlight a large insider purchase at Dillard’s Inc (DDS:US). Dillard’s is an upscale American department store chain. The company, which has around 280 stores across the US, focuses on delivering style, quality, and value to its customers by offering premium fashion apparel, beauty, and home collections from both national and exclusive brands. It is listed on the New York Stock Exchange and currently has a market capitalization of $5.6 billion.
Dillard’s Inc: Insider Buying
Our data shows that on February 23, board member Warren Stephens bought 20,000 DDS shares at a price of $230.51 per share. This trade cost the insider $4.6 million and increased his holding to 94,668 shares.
Mr. Stephens is an American businessman that has considerable experience in the investment world. Since 1986, he has served as President and CEO of Stephens Inc., a privately-held investment bank that provides capital to small-cap and middle-market companies. Given his background, it’s fair to assume he has a good understanding of the intrinsic value here.
What stands out about the purchase from Mr. Stephens is its size. Not only is it large in nominal terms, but it is also large in relative terms as it has increased the size of his position by 27%. This suggests he is confident the stock is undervalued at present.
Strong Q4 Results
Dillard’s recently posted a strong set of Q4 2021 results.
For the period, total retail sales were $2.08 billion, up from $1.52 billion a year earlier. Comparable retail sales increased 37% on Q4 2021 and 12% on Q4 2019. Meanwhile, net income amounted to $16.61 per share, compared to net income of $3.05 per share a year earlier. Record cash flow from operations of $1.28 billion helped the company end the quarter with a cash balance of $716.8 million, compared to $360.3 million a year earlier.
“We ended fiscal 2021 on a very strong note with a fourth consecutive record quarter. Our fiscal year net income of $41.88 per share exceeds any annual performance in our history. Importantly, during the year, we returned $866 million to our shareholders through dividends and share buyback, while still ending the year with $717 million in cash,” commented CEO William T. Dillard, II.
On the back of these results, Dillard’s announced a new $500 million share repurchase program. It also declared a $0.20 cash dividend.
In light of these strong results, we see the insider buying here as a bullish indicator.