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Tiffany (TIF) Scores Low on 3 Parameters: Be Cautious

In our school days, we had read an idiom, "A stitch in time saves nine", meaning that timely action may prevent serious loss later on. How about applying the same principle to your portfolio? Exiting the underperforming stock at the right time helps maximize your portfolio's return. So, as an investor it would be a rational decision to shun from your portfolio a stock that has been witnessing falling share price and estimates, before it hurts your return.

Tiffany & CompanyTIF , the jewelry retailer, is one such stock whose share price has been plunging. The Zacks Consensus Estimate too has witnessed a downtrend.

From Stock Price Performance Perspective

Shares of Tiffany have been plunging and touched a 52-week low of $74.28 on Sep 28. Year to date, this Zacks Rank #4 (Sell) stock has nosedived approximately 25%. Moreover, shares have declined roughly 8% following the company's last earnings release on Aug 27. It has been over 10 months since the stock hit a 52-week high. It had last reached the pinnacle on Nov 25, 2014.

From Last Quarter's Performance Perspective

Tiffany succumbed to a negative earnings surprise of 4.4% in the second quarter of fiscal 2015, after registering back-to-back earnings beat of 17.4% in the first quarter and 0.7% in the final quarter of fiscal 2014. The company's quarterly earnings of 86 cents a share missed the Zacks Consensus Estimate of 90 cents and declined 10.4% from 96 cents delivered in the year-ago quarter. A strong U.S. dollar and increased selling, general and administrative expenses hurt the company's bottom line.

Tiffany's revenues for the second quarter also fell short of the Zacks Consensus Estimate, after outperforming the same in the first quarter. Net sales of $990.5 million came in marginally lower than $992.9 million recorded in the prior-year quarter, and way below the Zacks Consensus Estimate of $1,006 million. Net sales bore the brunt of foreign currency headwinds that lowered the value of sales generated in the overseas market and resulted in reduced spending by tourists.

From Estimate Revisions Perspective

Following Tiffany's discouraging performance and dull outlook, the Zacks Consensus Estimate witnessed a downtrend. The dismal results, global turbulence and the strong dollar compelled management to take a cautious stance. It now projects fiscal 2015 earnings to decline 2%-5% year over year to $4.20 per share. Earlier, it had anticipated minimum growth in earnings per share in fiscal 2015 over fiscal 2014.

Analysts polled by Zacks are not convinced about the stock's future performance. Over the past 60 days, the Zacks Consensus Estimate of $4.03 and $4.52 per share for fiscal 2015 and fiscal 2016 has declined 4.3% and 4.4%, respectively. Moreover, the Zacks Consensus Estimate for the third quarter has decreased 8.4% to 76 cents over the same time frame.

With Tiffany's share price tumbling and estimates witnessing downward revisions, it would not be prudent to keep the stock in your portfolio, at least for the time being.

Stocks that Warrant a Look

Investors interested in the retail space may consider better-ranked stocks such as Citi Trends, Inc. CTRN , sporting a Zacks Rank #1 (Strong Buy), American Eagle Outfitters, Inc. AEO and Guess' Inc. GES , both carrying a Zacks Rank #2 (Buy).

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AMER EAGLE OUTF (AEO): Free Stock Analysis Report

TIFFANY & CO (TIF): Free Stock Analysis Report

CITI TRENDS INC (CTRN): Free Stock Analysis Report

GUESS INC (GES): 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 Nasdaq, Inc.


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

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