Will TIFFANY Stock as Shines as The Jewelry?

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May 30 2007
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TIFFANY & CO (NYSE: TIF, stock) is set to announce its’ earning on Thursday, May-31-2007 before market open. The Company is engaged in product design, manufacturing and retailing activities. Tiffany offers a selection of TIFFANY & CO. brand jewelry at a range of prices. In addition to jewelry, the Company sells TIFFANY & CO. brand merchandise, such as timepieces and clocks; sterling silver merchandise, including flatware, hollowware (tea and coffee services, bowls, cups and trays), trophies, key holders, picture frames and desk accessories; stainless steel flatware; crystal, glassware, china and other tableware; custom engraved stationery; writing instruments, and fashion accessories.

Fragrance products are sold under the trademarks, such as TIFFANY, PURE TIFFANY and TIFFANY FOR MEN. Tiffany also sells other brands of timepieces and tableware in its United States stores.

Rating Indicators for TIF:

  • Wall Street consensus : 0.35
  • StockScouter rating : 8 / 10
  • Whisper Number for this stock : 0.34
  • Schaeffer rating for this stock : 6 / 10
  • Power Rating : 7 / 10
  • Insider Trading (last 52 weeks) : ($22.20 M)
  • Zacks Analysts Rating: Moderate Buy
  • Option Trading: Nov 2007 50.00 Call
  • Implied Volatility (IV) for Jul 2007 $50.00 Strike : 26.99%

Sales, Income & Growth – For the past 12-months, Tiffany registered $2.65 Billion in sales versus the industry’s $2.76 Billion. Income amounted to $253.93 Million against the industry’s $220.03 Million. While Tiffany’s 12-months sales growth is at N/A the income growth is in negative 0.30% (the same industry sector sales growth is at N/A and income growth of 1.90%).

Profitability & Financial Health – For the past 12-months, net profit margin is in the region of 9.6%. Tiffany has a debt/equity ratio of 0.29 compare to industry’s ratio of 0.27.

Stock Resistance & Support Level – The resistance is at 53.70 (52-week high) while the first level support is at 48.45 (50-day moving average)

Risks – The ratio of Tiffany’s price-to-earnings multiple (28.50) is rather high and above the average of all stocks within the same sector.

Jewelry retailer Tiffany & Co. said on Tuesday it would open a new men’s boutique in Japan later this year — the first of its kind that will sell jewelry and accessories made exclusively for men. “Tiffany & Co. The Men’s Store” will open in the men’s building of Isetan Department Store in the busy commercial district of Shinjuku in Tokyo.

Set to open in early September, the store will sell merchandise designed specially for men such as watches and jewelry designed by luminaries like Frank Gehry, Jean Schlumberger and Elsa Peretti, the company said. Tiffany already sells men’s jewelry and accessories in its other stores, and through its Web site. Currently, there are no plans to open similar stores in Tiffany’s U.S. and European markets, though the company sees potential in the idea.

What attracts me to this stock is the almost 45 degrees uptrend – though there were past quarters where it didn’t beat earning, the trend was intact and has been consistent for more than a year. Last week however, HSBC Global Research analyst said the stock has limited room for growth in the near term and trimmed the stock to “Neutral” from “Overweight”. The stock is up 22 percent since the end of February, when billionaire investor Nelson Peltz disclosed he owns about 5.4 percent of Tiffany. Peltz, who has investments in Heinz, Wendy’s and Triarc Companies, is an activist shareholder known for agitating management for change. So you can’t blame the analysts for being extra cautious.

Interesting enough, the same HSBC analyst raised his price target for Tiffany by $3 to $55 per share. The analyst also forecast Tiffany will beat the earning by a penny and sales at $598 million, which is below the average analyst estimate of $607.6 million. If the stock plunges tomorrow by big gap, it will reverse the current trend and a Put option might be the magic bullet to make more money while I’m still holding the Call option which has great amount of time-value. Alternatively I can convert my Call option to a spread.

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