Rating Change #5
Tiffany & Co (TIF) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.
Highlights from the ratings report include:
- TIF's revenue growth has slightly outpaced the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 7.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, TIFFANY & CO's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for TIFFANY & CO is rather high; currently it is at 62.00%. Regardless of TIF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TIF's net profit margin of 10.00% compares favorably to the industry average.
- Net operating cash flow has significantly decreased to -$120.59 million or 172.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- TIF's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.32%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, TIF is still more expensive than most of the other companies in its industry.
Tiffany & Co., through its subsidiaries, engages in the design, manufacture, and retail of fine jewelry worldwide. The company has a P/E ratio of 15.9, equal to the average specialty retail industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Tiffany has a market cap of $6.89 billion and is part of the services sector and specialty retail industry. Shares are down 17.4% year to date as of the close of trading on Tuesday.You can view the full Tiffany Ratings Report or get investment ideas from our investment research center.
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