Zacks Investment Research upgraded
Tiffany & Company
) to a Zacks Rank #1 (Strong Buy) on Jun 28, 2014, following the
company's better-than-expected financial results for first-quarter
Why the Upgrade?
The Zacks Consensus Estimate has been showing an uptrend since
the earnings announcement on May 21. The better-than-expected
results triggered the northward movement as analysts became more
constructive on the stock's future performance. This designer,
manufacturer and retailer of fine jewelry has outdone the Zacks
Consensus Estimate in the trailing four quarters with an average
beat of 15.2%. The long-term expected earnings growth rate for this
stock is 13.6%.
We observe that both the top and bottom lines came ahead of the
Zacks Consensus Estimate. The quarterly earnings of 97 cents a
share beat the Zacks Consensus Estimate of 77 cents and the
prior-year quarter earnings of 70 cents. Results benefited from
higher sales and improved operating margin. Net sales of $1,012.1
million grew 13% from the prior-year quarter, and surpassed the
Zacks Consensus Estimate of $953 million.
We believe Tiffany is well positioned to support robust sales
and witness earnings growth in the long run by leveraging capital
investments made over the past several years in distribution,
manufacturing and diamond sourcing processes. Moreover, with nearly
half of the total sales generated internationally, we believe that
the company is well diversified from a regional perspective as
Tiffany, which competes with
Signet Jewelers Limited
), holds a significant position in the world jewelry market, and
its long-term growth prospects remain encouraging given its product
launches and focus on enhancing its geographic reach through its
store expansion program.
Following a robust first quarter, Tiffany raised its earnings
expectations. The company now projects fiscal 2014 earnings between
$4.15 and $4.25 per share as against $4.05-$4.15 per share expected
earlier. Management now projects total net sales growth in the
high-single digit percentage for fiscal 2014 with growth expected
across all regions.
Strong results and the upbeat guidance led to an uptrend in the
Zacks Consensus Estimate, which increased 3.1% to $4.28 for fiscal
2014 and 2.3% to $4.85 for fiscal 2015 in the past 60 days.
Other Stocks to Consider
Other retail stocks that look promising include
Columbia Sportswear Company
) holding a Zacks Rank #2 (Buy).
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