The luxury jewelry company provides a reasonable level of predictability and stability in fundamentals, Jefferies analysts said.
"We now see a more powerful story unfolding of enhanced systems and supply chain capabilities combined with strong customer-facing strategies leading to an accelerating fundamental outlook in terms of higher margins and EPS in the years ahead, after 2015 was hurt by FX-related pressures (beyond TIF's control)," the firm said in an analyst note.
Tiffany is a "rare opportunity to get a high-quality company at a discount" the firm noted.
The company's stock closed down by 1.9% to $71.84 on Friday.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate TIFFANY & CO as a Buy with a ratings score of B-. This is driven by a few notable 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 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 analysis by TheStreet Ratings Team goes as follows:
- 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 year. 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 ($3.90 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 137.8% when compared to the same quarter one year prior, rising from $38.27 million to $91.00 million.
- The current debt-to-equity ratio, 0.38, 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 1.32, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for TIFFANY & CO is rather high; currently it is at 65.62%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.69% is above that of the industry average.
- Net operating cash flow has significantly increased by 370.72% to $117.60 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 18.99%.
- You can view the full analysis from the report here: TIF