Tiffany (TIF) Showing Signs Of Being Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Tiffany ( TIF) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Tiffany as such a stock due to the following factors:

  • TIF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $102.8 million.
  • TIF has traded 1.3 million shares today.
  • TIF traded in a range 205.9% of the normal price range with a price range of $2.79.
  • TIF traded below its daily resistance level (quality: 33 days, meaning that the stock is crossing a resistance level set by the last 33 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on TIF:

Tiffany & Co., through its subsidiaries, designs, manufactures, and retails jewelry worldwide. Its jewelry products include fine and solitaire jewelry; engagement rings and wedding bands to brides and grooms; and non-gemstone, sterling silver, gold, and metal jewelry. The stock currently has a dividend yield of 1.8%. TIF has a PE ratio of 23. Currently there are 10 analysts that rate Tiffany a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Tiffany has been 1.6 million shares per day over the past 30 days. Tiffany has a market cap of $11.2 billion and is part of the services sector and specialty retail industry. The stock has a beta of 2.11 and a short float of 3.3% with 3.33 days to cover. Shares are down 18.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tiffany as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • TIFFANY & CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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 $3.73 versus $1.40 in the prior year. This year, the market expects an improvement in earnings ($4.20 versus $3.73).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 289.4% when compared to the same quarter one year prior, rising from -$103.60 million to $196.18 million.
  • The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.44, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for TIFFANY & CO is rather high; currently it is at 64.66%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.26% is above that of the industry average.
  • Net operating cash flow has significantly increased by 966.35% to $437.34 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 32.07%.

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