Advertisement
Canada markets closed

  • S&P/TSX

    22,308.93
    -66.90 (-0.30%)
     

  • S&P 500

    5,222.68
    +8.60 (+0.16%)
     

  • DOW

    39,512.84
    +125.08 (+0.32%)
     

  • CAD/USD

    0.7317
    +0.0006 (+0.08%)
     

  • CRUDE OIL

    78.20
    -1.06 (-1.34%)
     

  • Bitcoin CAD

    83,054.45
    -2,833.57 (-3.30%)
     

  • CMC Crypto 200

    1,261.19
    -96.82 (-7.13%)
     

  • GOLD FUTURES

    2,366.90
    +26.60 (+1.14%)
     

  • RUSSELL 2000

    2,059.78
    -13.85 (-0.67%)
     

  • 10-Yr Bond

    4.5040
    +0.0550 (+1.24%)
     

  • NASDAQ

    16,340.87
    -5.40 (-0.03%)
     

  • VOLATILITY

    12.55
    -0.14 (-1.10%)
     

  • FTSE

    8,433.76
    +52.41 (+0.63%)
     

  • NIKKEI 225

    38,229.11
    +155.13 (+0.41%)
     

  • CAD/EUR

    0.6789
    +0.0011 (+0.16%)
     
MARKETS LIVE BLOG:

STOCKS CLIMB AS DOW POSTS 8TH STRAIGHT WIN

Fed's Michelle Bowman echoes higher-for-longer mantra for interest rates

Will Tiffany (TIF) Bounce Back after New Buyback Sanction?

Zacks Equity Research
Updated

Tiffany & Co.’s TIF board sanctioned a new share repurchase program under which the company will be able to buy back stocks worth up to $500 million. The program is effective immediately and will run through Jan 31, 2019.

This latest repurchase program has replaced the company’s existing one under which the company had nearly $61 million worth of shares left for repurchase as of Jan 20, 2016.

Tiffany has been consistently enhancing shareholders’ return through repurchases and dividend hikes. Tiffany bought back shares worth $60 million in the third quarter and $116 million in the first nine months of fiscal 2015.

We believe that the latest share repurchase program will significantly boost shareholders’ return, reflecting the company’s strong balance sheet. However, what is worrying investors is the company’s unfavorable market position in the wake of a challenging economy. This has taken a toll on the jewelry retailer as evident from the company’s subdued holiday sales numbers as well as a cautious outlook for fiscal 2015 and 2016. In the past six months, the company’s shares have lost more than 35% value.

ADVERTISEMENT

Tiffany’s sales for the holiday period – November and December – tumbled 6% year over year to $961 million and comps also declined 9%. However, on a constant currency basis, sales declined 3%, while comps decreased 5%. Decline in Americas and the Asia Pacific offset growth in Europe and Japan. A stronger U.S. dollar as well as dismal tourist spending in a number of markets led to the weak sales result.

Management now envisions a 10% decline in fiscal 2015 earnings per share from the fiscal 2014 figure of $4.20 per share. Previously, earnings were estimated to decline by 5–10%. Currently, the Zacks Consensus Estimate is pegged at $3.85. However, Tiffany expects to generate free cash flow of at least $500 million in this fiscal.

Moreover, this Zacks Rank #5 (Strong Sell) stock maintains a cautious stance for 2016 given the currency headwinds and macroeconomic issues, which are likely to weigh on both sales and earnings.

Stocks to Consider

Better-ranked stocks in the retail sector are Abercrombie & Fitch Co. ANF, Express Inc. EXPR and Vera Bradley, Inc. VRA. All these stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
ABERCROMBIE (ANF): Free Stock Analysis Report
 
VERA BRADLEY (VRA): Free Stock Analysis Report
 
EXPRESS INC (EXPR): Free Stock Analysis Report
 
TIFFANY & CO (TIF): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research