TSC Ratings' Updates: Tiffany

Shares are down 49.02%, underperforming the S&P 500. Naturally, the overall market trend is bound to be a significant factor, and in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

We've downgraded Tiffany (TIF Quote) from hold to sell, driven by a generally disappointing historical performance in the stock itself.

The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying successful management of debt levels. The quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs. Current return on equity exceeded its ROE from the same quarter one year prior, a clear sign of strength within the company. ON the basis of ROE, Tiffany outperformed the S&P 500 but underperformed the industry average. Tiffany's gross profit margin of 62.7% is rather high, having increased from the same quarter a year ago. Along with this, the net profit margin of 11.00% is above that of the industry average. Net operating cash flow has slightly increased to $76.81 million, or 1.97% when compared with the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -26.56%

Shares are down 48.32% on the year, which is worse than the S&P 500's performance. This should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.