Market Overview

Tiffany Earnings Preview: Second Quarter Expected to Shine

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Tiffany (NYSE: TIF) is scheduled to report second-quarter 2011 results Friday, August 26, before the opening bell. The luxury goods retailer has been on a roll, with double-digit growth of both EPS and revenues in the previous three quarters. Investors will be looking for that momentum to continue.

Analysts on average predict that Tiffany will report earnings of $0.70 per share, which is an increase over $0.55 in the same period of last year. That EPS estimate is up a penny from 60 days ago. And note that analysts have underestimated the company's per-share earnings in the past five quarters.

The consensus forecast also calls for the company to post revenues of $785.4 million, which would be 17.4% higher than a year ago. Looking ahead to the current quarter, analysts so far are looking for sequential and year-over-year growth of revenues. And the forecast for the full year so far calls for revenues up 16.0% year over year, with per-share earnings 17.7% higher.

The Company

Headquartered on Fifth Avenue in New York, Tiffany & Co. designs, manufactures and retails fine jewelry worldwide. The company also provides timepieces, sterling silver goods, china, crystal, stationery, fragrances, personal accessories and leather goods. It operates more than 225 stores and boutiques worldwide. The company was founded in 1837, is an S&P 500 component and currently has a market cap of $8.1 billion.

During the three months that ended in July, the company boosted its dividend by 16%, increased its full-year outlook and appointed a new chief financial officer and a new chief operating officer.

Performance

The company has a long-term earnings per share growth forecast of 14.7%, a return of equity of 18.2% and a dividend yield of 1.8%. Its P/E and PEG ratios are higher than the industry average, but 13 out of 24 analysts rate the stock a Buy or Strong Buy, while only one rates it a Sell.

The share price is more than 53% higher than a year ago despite falling about 22% in the past month. Shares are up only about 3% year to date. But the stock has outperformed competitors such as Coach (NYSE: COH) and Zale (NYSE: ZLC), as well as the broader markets, year to date.

Action Items:

Bullish: Traders interested in exchange traded funds invested in Tiffany might want to consider the following trades:

  • Consumer Discretionary Select Sector SPDR (NYSE: XLY): up more than 20% in the past year
  • iShares Russell Midcap Growth Index (NYSE: IWP): up about 18% in the past year
  • Vanguard Mid-Cap ETF (NYSE: VO): up more than 15% in the past year

Bearish: Traders may want to consider these alternative positions:

  • Direxion Daily Mid Cap Bear 3X Shares (NYSE: MWN): up more than 37% in the past month
  • ProShares UltraShort Russell MCap Growth (NYSE: SDK): up more than 27% in the past month
  • ProShares UltraShort Consumer Goods (NYSE: SZK): up about 10% in the past month

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

 

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