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, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • TIF's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 178.39% to $79.22 million when compared to the same quarter last year. In addition, TIFFANY & CO has also vastly surpassed the industry average cash flow growth rate of 5.45%.
  • The gross profit margin for TIFFANY & CO is rather high; currently it is at 59.30%. 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 7.40% compares favorably to the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.40, 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 0.90 is weak.
  • In its most recent trading session, TIF has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

Tiffany & Co., through its subsidiaries, engages in the design, manufacture, and retail of fine jewelry worldwide. Tiffany has a market cap of $8.45 billion and is part of the services sector and specialty retail industry. The company has a P/E ratio of 20.6, above the S&P 500 P/E ratio of 17.7. Shares are up 17.1% 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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