Tiffany & Co. (TIF), the designer, manufacturer and retailer of jewelry, is slated to report third-quarter fiscal 2014 results on Nov 25. In the last quarter, it had posted a positive earnings surprise of 11.6%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Tiffany holds a significant position in the world jewelry market. Its long-term growth prospects remain encouraging, given its product launches and focus on enhancing its geographic reach through store expansions. However, softening demand across Japan and Europe is likely to exert pressure.
Moreover, due to high exposure to international markets, Tiffany remains prone to currency fluctuations. The weakening of foreign currencies against the U.S. dollar may require the company to either raise prices or contract profit margins in locations outside of the U.S. A rise in prices may have a direct impact on the demand.
Earnings Whispers?
Our proven model does not conclusively show that Tiffany is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Tiffany is -2.60%. This is because the Most Accurate estimate stands at 75 cents, while the Zacks Consensus Estimate is pegged at 77 cents.
Zacks Rank: Tiffany’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements:
The Kroger Co. (KR) has an Earnings ESP of +3.28% and a Zacks Rank #2 (Buy).
Zumiez, Inc. (ZUMZ) has an Earnings ESP of +3.85% and a Zacks Rank #2.
Campbell Soup Company (CPB) has an Earnings ESP of +1.37% and a Zacks Rank #3.
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