Dillard's Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares department store operator Dillard's (NYS: DDS) plummeted 17% on Friday after its quarterly results fell short of expectations.

So what: While the company's second-quarter adjusted profit more than doubled to $0.30 per share, it missed the average analyst estimate ($0.39 per share) by more than 20%. When you couple that wide of a whiff with the stock's impressive 150% return over the past year, it's easy to see why Mr. Market is seriously readjusting his expectations today.

Now what: I wouldn't pounce on this plunge just yet. Dillard's improving same-store sales, cost structure, and profits are certainly a positive, but with the stock still up a quite a bit over the past several months, much of the optimism continues to be baked into the price. While the department store business isn't exactly attractive, rivals like Nordstrom (NYS: JWN) and Macy's (NYS: M) -- both of which reported market-topping quarters today, but whose stocks aren't nearly as hot -- seem like better bets.

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At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool'sdisclosure policyalways gets a perfect score.

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