Tiffany & Co. Stock Buy Recommendation Reiterated (TIF)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Tiffany (NYSE: TIF) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, notable return on equity, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • TIF's revenue growth trails the industry average of 12.7%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • TIFFANY & CO's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TIFFANY & CO increased its bottom line by earning $3.41 versus $2.87 in the prior year. This year, the market expects an improvement in earnings ($3.60 versus $3.41).
  • 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 on the basis of return on equity, TIFFANY & CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for TIFFANY & CO is rather high; currently it is at 60.80%. 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 10.40% compares favorably to the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.39, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.07 is sturdy.

Tiffany & Co., through its subsidiaries, engages in the design, manufacture, and retail of fine jewelry worldwide. The company has a P/E ratio of 18.1, equal to the average specialty retail industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Tiffany has a market cap of $7.9 billion and is part of the services sector and specialty retail industry. Shares are down 5% year to date as of the close of trading on Thursday.

You can view the full Tiffany Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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