Could Tiffany & Co. (TIF) Stock Be a Diamond in the Rough?

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Tiffany & Co. (NYSE:TIF), a designer and retailer of fine jewelry, was off to the races last Friday after reporting fourth-quarter results that beat the Street, with strong guidance with “meaningful growth” acting as the icing on the cake. The rally was great for those who already own a position in the stock, but I have some concerns at current levels.

TIF Stock: Could Tiffany & Co. (TIF) Stock Be a Diamond in the Rough?

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Let’s look at the numbers first. Adjusted earnings of $1.45 a share were down a penny from last year but bested expectations of $1.38 a share. Revenue grew 1.6% to $1.23 billion, which was also better than estimates of $1.22 billion. TIF stock same-store sales were unchanged while analysts had been looking for a decline of more than 1%.

TIF Stock Shows Strength

For fiscal 2017, management forecasted a mid-single-digit increase on the bottom line. The Street had anticipated guidance of $3.85 a share, which implies 2.7% growth.

The solid fourth-quarter results were driven by strong sales in the Asia-Pacific region, which gained 9% thanks to the opening of new stores. New, cheaper and higher-margin products also boosted results.

At the same time, though, the company experienced domestic weakness due to sluggish tourism spending and continued struggles in brick-and-mortar retail. In fact, sales at Tiffany’s flagship store in New York City declined 7% in the quarter. They were down 11% in the full year and 14% during the holiday season.

Some of this was due to slower tourism, but it also has to do with the fact that the store is located next to Trump Tower, which has undergone increased security measures.

TIF stock climbed as much as 4.5% following Friday’s release to hit a new 19-month high, and I believe the strength was thanks in part to low expectations and better sales outside the United States. But as I mentioned, I still have concerns here.


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First, the flagship store has been a perennial disappointment — the company stopped breaking out its numbers not long ago, which underscores the issue — and I would love to see a major renovation that would make it more modern and an overall better shopping experience.

It’s also time for new designers — and on that note, it’s worth mentioning that the lower dollar is great news for the company.

I’ve certainly had success buying TIF stock after sell-offs in the past, and the majority of the disappointments I’ve had have been the result of buying too soon and thinking the worst was already over. But I wouldn’t be a buyer here.

Technically, the stock is at a two-year double top, which is bearish. So while I wouldn’t chase Tiffany at the moment, I do see ways the company can justify higher valuations in the future as long as management makes some changes and becomes more consistent in its execution.

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