Investors want their portfolio to have stocks with a track record of better-than-expected results, surging share price and a favorable recommendation. However, Tiffany & Co. TIF, the jewelry retailer, has failed to meet any of these criteria. So what went wrong with this New York-based company? Let’s find out.
Year to date, this Zacks Rank #4 (Sell) stock has lost approximately 16%. Moreover, shares have declined roughly 2.4% following the company’s last earnings release on May 25.
After registering a positive earnings surprise of 4.3% in the final quarter of fiscal 2015, Tiffany succumbed to a negative earnings surprise of 5.9% in the first quarter of fiscal 2016. The company’s quarterly earnings of 64 cents a share missed the Zacks Consensus Estimate of 68 cents and plunged 21% year over year. Soft top-line performance and higher SG&A expenses hurt the bottom line. Net sales fell 7% from the prior-year quarter and also lagged our estimate. The decline in net sales was due to lower spending by both local customers and foreign tourists.
Tiffany's dwindling top- and bottom-line results remain the primary concern for investors. A look at the company's performance in fiscal 2015 unveils that earnings per share fell 7.9% and 3% year over year in the third and fourth quarters, respectively. Maintaining the same chronological order, we observe that net sales also dropped 2.2% and 6%, respectively.
Following a dismal first-quarter performance, Tiffany provided a muted outlook for fiscal 2016. Management projects earnings per share for the fiscal year to decrease by a mid-single-digit percentage and second-quarter earnings per share to decline at a rate equivalent to that of the first quarter. The company now envisions fiscal 2016 worldwide net sales to decrease by a low-single-digit percentage.
Consequently, the Zacks Consensus Estimate has been witnessing a downtrend. Analysts polled by Zacks are not convinced about the stock’s future performance. Over the past 30 days, the Zacks Consensus Estimate of $3.61 and $3.91 for fiscal 2016 and fiscal 2017 has decreased 13 cents and 15 cents, respectively. Moreover, the Zacks Consensus Estimate for the second quarter has dropped 8 cents to 72 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.
TIFFANY & CO Price, Consensus and EPS Surprise
TIFFANY & CO Price, Consensus and EPS Surprise | TIFFANY & CO Quote
Stocks that Warrant a Look
Investors interested in the retail space may consider better-ranked stocks such as Burlington Stores, Inc. BURL, The Home Depot, Inc. HD and The Kroger Co. KR, all carrying a Zacks Rank #2 (Buy).
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