Department store stock Dillard's, Inc. (NYSE: DDS) has been quite an unexpected gainer over the past year, up 16% year-over-year and 27% already in 2021. This year's gains also resulted in a six-year high of $128 on Jan. 27, and the subsequent pullback found support at the stock's 20-day moving average.

A short squeeze could be fueling these gains. Short interest fell over 52% in the last two reporting periods, yet the 2.10 million shares sold short accounts for a healthy 16% of DDS' total available float. At the stock's average pace of trading, it would take shorts more than four days to buy back their bearish bets.

Dillard's is slated to report fourth-quarter earnings later this month on Tuesday, Feb. 23 after the close. Wall Street analysts project that DDS will report earnings per share (EPS) of $2.25 in its upcoming earnings report on the fourth quarter of 2020. In the last eight quarters, Dillard's has averaged a post-earnings move of 8.7%, regardless of direction. This includes post-earnings pops of 12% back in May, as well as a 15% drop back in November 2018.

However, Dillard's stock doesn’t present the best value at the moment. Dillard’s has still taken considerable losses over the past 12 months, which is to be expected given the Covid-19 pandemic. The company saw its revenue decrease by more than $1.5 billion over the past year, marking a decline of about a 25%. They also lost nearly $200 million in net income this past year, bringing its total net losses to $71 million.

Outside of the pandemic, Dillard’s bottom-line figures have been in a constant state of decline over the past three years. Nonetheless, there is a realistic possibility that Dillard's stock continues on an upward trajectory in the coming months due to the positive momentum in the overall market.