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Dillard's, Inc. (DDS) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Dillard's, Inc. (DDS)

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Intrinsic Value (DCF)

Current$665.24
→
Intrinsic$1,346.44
+102%
$919.94$1,346.44$2,155.64
Market implies 7% growth for 5 years
DCF analysis suggests DDS could have 102% upside at 25% growth — verify assumptions match your view.
At $665, the market prices in only 7% growth — below historical 25%, suggesting low expectations.
Range: Bear $920 → Bull $2156. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$1655$1787$1927$2077
10%$1160$1250$1346$1449
12%$887$954$1026$1101
14%$714$767$823$882

Bull Case

  • Bull case ($2156) offers 224% upside at 30% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (7%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($920) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$761.97M
Year 2$952.46M
Year 3$1.19B
Year 4$1.49B
Year 5$1.86B
Terminal$27.37B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$609.58MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is DDS stock undervalued or overvalued?
🟢 UNDERVALUED

DDS trades at $665.24 vs. our DCF-derived intrinsic value of $1117.11, implying +71% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of DDS's future cash flows. The bear case ($736.18) still suggests upside, providing margin of safety.

What is DDS's intrinsic value?

Using a 5-year DCF model: Base FCF of $610M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-163M net debt and dividing by 0.02B shares: Bear $736.18 | Base $1117.11 | Bull $1678.06. Current price $665.24 implies +71% to base case.

How is DDS's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($17.85B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.