Why is Tiffany a Strong Buy? - Analyst Blog

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Zacks Investment Research upgraded Tiffany & Company ( TIF ) to a Zacks Rank #1 (Strong Buy) on Jun 28, 2014, following the company's better-than-expected financial results for first-quarter fiscal 2014.

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 well.

Tiffany, which competes with Signet Jewelers Limited ( SIG ), 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 ( COLM ) and Hanesbrands Inc. ( HBI ) holding a Zacks Rank #2 (Buy).


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COLUMBIA SPORTS (COLM): Free Stock Analysis Report

TIFFANY & CO (TIF): Free Stock Analysis Report

SIGNET JEWELERS (SIG): Free Stock Analysis Report

HANESBRANDS INC (HBI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: COLM , TIF , SIG , HBI

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