On Jan 10, 2014, Zacks Investment Research upgraded Tiffany & Company (TIF), the designer, manufacturer and retailer of fine jewelry, to a Zacks Rank #1 (Strong Buy). The stock has amassed a return of roughly 45% over the past one year.
Why the Upgrade?
We believe Tiffany is well poised to support sales and earnings growth in the long run by leveraging capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes. The company’s long-term growth prospects remain encouraging given its new product launches and focus on enhancing its geographic reach through store expansion program. It remains committed to achieve long-term objectives of at least 15% earnings growth and a 10% to 12% sales increase.
Tiffany, which competes with Signet Jewelers Limited (SIG), continued its positive earnings streak by beating the Zacks Consensus Estimate in the trailing four quarters. The company posted a positive earnings surprise of 25.9% in the third quarter, 12.2% in the second quarter, 32.1% in the first quarter of fiscal 2013, and 2.2% in the fourth quarter of fiscal 2012.
With four successive quarters of better-than-expected bottom-line results, Tiffany appears favorably positioned. The company’s fiscal-2013 earnings guidance is also encouraging. With the economy showing signs of recovery, we expect Tiffany’s robust performance to continue going forward.
Tiffany’s recent holiday sales data also provide a sense of optimism. Worldwide net sales during the holiday period (two-months ended Dec 31st) rose 4% to $1.03 billion, buoyed by healthy performance of its stores in the Americas, Asia-Pacific and Europe. In constant currencies, net sales increased 8%, whereas comparable-store sales climbed 6%.
The Zacks Consensus for fiscal 2013 increased 5.3% to $3.80, while for fiscal 2014 it rose 4.6% to $4.28 per share in the last 60 days.
Other Stocks that Warrant a Look
Other better-ranked retail stocks that look promising and are expected to continue with their upbeat performance include Barnes & Noble, Inc. (BKS) carrying Zacks Rank #1 (Strong Buy) and Michael Kors Holdings Limited (KORS) sporting a Zacks Rank #2 (Buy).
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