The U.S. luxury retail company, whose principal product category is jewelry, could be affected by a soft market abroad, analysts said.
"We like the initiatives underway, but think the stock does not fully reflect softness in international markets, which represented 58% of sales last year and could create near-term earnings risk," Barclays analyst Joan Payson said, adding, "Tiffany could be considered the closest to an absolute luxury brand in the U.S. luxury sector based on pricing, and as such, we expect international markets to drive 55% of revenue and EPS growth by 2017."
Shares of Tiffany are down 0.41% to $90.35.
Separately, TheStreet Ratings team rates TIFFANY & CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TIFFANY & CO (TIF) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TIF's revenue growth has slightly outpaced the industry average of 0.0%. Since the same quarter one year prior, revenues slightly increased by 7.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for TIFFANY & CO is rather high; currently it is at 64.71%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.50% is above that of the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 16.2% when compared to the same quarter one year prior, going from $106.78 million to $124.12 million.
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.32% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full analysis from the report here: TIF Ratings Report