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Factors Likely to Influence Tiffany (TIF) in Q2 Earnings

Zacks Equity Research

Tiffany & Co. TIF is scheduled to release second-quarter fiscal 2019 results on Aug 28. The renowned jewelry retailer’s earnings had surpassed the Zacks Consensus Estimate in the last reported quarter. Further, the company has an average positive earnings surprise of 5.1% in the trailing four quarters. Let’s see what’s in store for the company this time around.

What to Expect?

The Zacks Consensus Estimate for earnings in the second quarter has remained unchanged in the past 30 days at $1.05 compared with $1.17 reported in the year-ago quarter. The consensus mark for revenues is $1,067 million, suggesting a marginal a decline of 0.6% from the year-ago quarter’s reported figure.

Factors to Note

Tiffany is likely to benefit from its brand enhancement endeavors, focus on omni-channel development and efforts to strengthen position in key markets. To this end, the company is committed toward elevating in-store experience and replenishing product portfolio. The company is also looking at other revenue generating avenues, which include expansion of its watch business.

Further, with about half of the total sales generated internationally, we believe that the company is well diversified from a regional perspective. However, international presence exposes it to foreign currency headwinds, which are expected to be an obstacle in the upcoming release.

Markedly, management earlier guided that Tiffany is likely to witness roadblocks in the first half of fiscal 2019, stemming from tough year-over-year sales comparisons and increased investments. The company projected second-quarter earnings to decline owing to sales-related challenges on account of lower foreign tourist spending, tough year-over-year comparisons and sales deleverage on fixed costs. Clearly, these factors pose concerns for the quarter to be reported.

Additionally, Tiffany has been incurring high SG&A expenses for quite some time now. Increased marketing spending, and high expenditure in technology, visual merchandising, digital and store presentations may keep margins under pressure in the quarter under review.

Tiffany & Co. Price, Consensus and EPS Surprise

 

Tiffany & Co. Price, Consensus and EPS Surprise

Tiffany & Co. price-consensus-eps-surprise-chart | Tiffany & Co. Quote

What the Zacks Model Unveils

Our proven model does not conclusively show that Tiffany is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — 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 a Zacks Rank #3 but an Earnings ESP of -3.33%, which makes surprise prediction difficult.

Stocks With Favorable Combination

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

Casey’s General Stores CASY has an Earnings ESP of +8.43% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores BURL has an Earnings ESP of +0.17% and a Zacks Rank #2.

Costco COST has an Earnings ESP of +0.30% and a Zacks Rank #3.

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