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Tiffany (TIF) Q4 Earnings to Gain From Robust Holiday Sales


Tiffany & Co. TIF is slated to report fourth-quarter fiscal 2017 results on Mar 16. Last quarter, the company delivered a positive earnings surprise of 5.3%.

Let’s see how things are shaping up for this announcement.

Which Way are Estimates Treading?

Investors are keen on finding out whether Tiffany — a global designer, manufactures and retailer of jewelry and other items — will be able to sustain its positive earnings surprise streak in the fourth quarter. Notably, the company has outperformed the Zacks Consensus Estimate in the trailing four quarters, with an average of 5.3%. The consensus mark Estimate for the quarter is pegged at $1.63, up over 12% from the prior year. Analysts polled by Zacks expect revenues of $1,350 million, up above 6% year over year.

Factors at Play

Tiffany’s fourth-quarter results are likely to be driven by robust holiday season. In the quarter, net sales came in at $1.05 billion, up 8% from the prior-year period. Moreover, comparable-store sales (comps) increased 5%. While sales in the Americas rose 7% to $516 million, comps were up by 6%. Higher spending by local customers and growth across the United States, Canada and Latin America led to sales growth in the region. In the Asia-Pacific region, the metric was up 16% to $232 million while comps improved 7% primarily driven by fresh store opening and rise in wholesale sales. Increase in retail sales were owing to surge in spending mainly in mainland China, Hong Kong and Korea.

Meanwhile, the company’s omni-channel platform, store expansion programs, new design launches, tapping of new markets and venturing into new revenue generating avenues bode well for the stock. Also, Tiffany is well positioned to augment its top- and bottom-line performance in the long run by leveraging capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes.

However, management had earlier guided SG&A expenses for the fiscal year to increase at a marginally higher rate compared to sales, on account of sustained investment in new signature women's fragrance, launch of new luxury accessories offerings and additional jewelry SKUs. This, in turn, might strain margins to an extent. In the first, second and third quarter of fiscal 2017, SG&A expenses had increased 0.2%, 3.7% and 3.3%, respectively.

Tiffany & Co. Price, Consensus and EPS Surprise

What the Zacks Model Unveils

Our proven model does not show that Tiffany is likely to beat estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tiffany has an Earnings ESP of 0.00%. Although the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

The Children's Place, Inc. PLCE has an Earnings ESP of +0.40% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Movado Group, Inc. MOV has an Earnings ESP of +1.96% and a Zacks Rank of 2.

Lululemon Athletica Inc. LULU has an Earnings ESP of +1.30% and a Zacks Rank of 3.

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