Dillard's and Coupang: Underrated Stocks to Watch

Dillard's and Coupang show strong potential for growth. Dillard's impressive buyback program and strong margins make it a candidate for value investment, while Coupang's substantial revenue growth positions it favorably in the e-commerce space.

Date: 04-02-2025

AI Rating: 7

Overview of Dillard's Performance
Dillard's has displayed remarkable performance, achieving a significant 670% increase in stock value over the last five years. This growth can be attributed to an aggressive share buyback program and effective inventory management, which have fortified the company's competitive stance within a challenging retail environment.

Dillard's currently has a price-to-earnings (P/E) ratio of 12, suggesting the stock may still be undervalued. Although revenue and earnings per share dipped in the fiscal 2024 third quarter, the company still maintains a strong gross margin of 45%. A successful return to revenue growth could see the stock advance further, particularly if buybacks are accelerated.

Coupang's Growth Trajectory
Coupang, South Korea's largest e-commerce platform, is experiencing significant momentum with a year-over-year revenue increase of 27% to $7.9 billion in Q3 2024. This growth is complemented by a rise in gross profit of 45% to $2.3 billion and an impressive improvement in gross margin, which increased by 350 basis points. Coupang's strategy to diversify into higher-margin businesses and maintain leading delivery capabilities poises it well for future growth.

The acquisitions, such as the $500 million purchase of Farfetch, present an opportunity to improve its standings in the luxury market, a sector known for its higher profit margins.

Investment Implications
Both Dillard's and Coupang are presenting unique investment opportunities due to their distinct business strategies and performance metrics. Dillard's strong buyback and profit margins paired with Coupang’s robust revenue growth suggest that both stocks could react positively to a potential recovery or growth in their respective markets.

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