Dillard's (DDS) & Tempur Sealy International (TPX) Critical Comparison

Dillard's (NYSE: DDS) and Tempur Sealy International (NYSE:TPX) are both mid-cap retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Insider & Institutional Ownership

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90.8% of Dillard's shares are owned by institutional investors. 26.6% of Dillard's shares are owned by company insiders. Comparatively, 2.1% of Tempur Sealy International shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Dillard's and Tempur Sealy International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dillard's 2 0 1 0 1.67
Tempur Sealy International 0 4 5 0 2.56

Dillard's presently has a consensus price target of $57.00, suggesting a potential downside of 27.25%. Tempur Sealy International has a consensus price target of $62.29, suggesting a potential upside of 40.09%. Given Tempur Sealy International’s stronger consensus rating and higher possible upside, analysts plainly believe Tempur Sealy International is more favorable than Dillard's.

Dividends

Dillard's pays an annual dividend of $0.40 per share and has a dividend yield of 0.5%. Tempur Sealy International does not pay a dividend. Dillard's pays out 5.3% of its earnings in the form of a dividend. Tempur Sealy International has increased its dividend for 4 consecutive years.

Risk & Volatility

Dillard's has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, Tempur Sealy International has a beta of 1.4, suggesting that its stock price is 40% more volatile than the S&P 500.

Valuation & Earnings

This table compares Dillard's and Tempur Sealy International’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dillard's $6.42 billion 0.35 $221.30 million $7.59 10.32
Tempur Sealy International $2.75 billion 0.88 $151.40 million $2.79 15.94

Dillard's has higher revenue and earnings than Tempur Sealy International. Dillard's is trading at a lower price-to-earnings ratio than Tempur Sealy International, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Dillard's and Tempur Sealy International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dillard's 3.45% 8.57% 3.61%
Tempur Sealy International 5.54% 348.78% 6.47%

Summary

Tempur Sealy International beats Dillard's on 11 of the 17 factors compared between the two stocks.

Dillard's Company Profile

Dillard’s, Inc. is a retailer of fashion apparel, cosmetics and home furnishing. As of January 28, 2017, the Company operated 293 Dillard’s stores, including 25 clearance centers, and an Internet store offering a selection of merchandise, including fashion apparel for women, men and children, accessories, cosmetics, home furnishings and other consumer goods. The Company’s segments include the Retail operations segment and the Construction segment. The Retail operations segment includes the operation of the Company’s retail department stores. The Construction segment includes the operations of CDI Contractors, LLC (CDI), a general contracting construction company. CDI’s business includes constructing and remodeling stores for the Company. As of January 28, 2017, the Company operated retail department stores in 29 states, primarily in the southwest, southeast and midwest regions of the United States.

Tempur Sealy International Company Profile

Tempur Sealy International, Inc. is a bedding manufacturer. The Company develops, manufactures, markets and distributes bedding products. The Company operates in two segments: North America and International. The North America segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in the United States and Canada. Its International segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America. Its brand portfolio includes TEMPUR, Tempur-Pedic, Sealy, Sealy Posturepedic, and Stearns & Foster. It offers its products in over two categories, including Bedding, which includes mattresses, foundations and adjustable foundations, and Other, which includes pillows, mattress covers, sheets, cushions and various other comfort products. As of December 31, 2016, it sold its products across the globe in approximately 100 countries.

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