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Assessing Tiffany’s Market Valuation Relative to the S&P 500

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Dec. 22 2015, Updated 12:04 p.m. ET

Tiffany’s market valuation

Signet Jewelers (SIG) and Tiffany & Company (TIF) are leading players in jewelry industry (XRT). Tiffany is trading at a higher multiple than its peers Signet and Fossil (FOSL). It’s also trading at a higher valuation relative to the S&P 500 (SPY) (IVV) (VOO) and the Dow Jones Industrial Average (DIA).

As the above graph shows, as of December 8, 2015, Tiffany was trading at a forward PE (price-to-earnings) multiple of 18.5x, and Signet was trading at 16.5x forward earnings. In comparison, Fossil was trading at a forward PE multiple of 10.3x over the same period.

SPY was trading at a forward PE multiple of 17.4x, and DIA was trading at a forward PE multiple of 15.9x as of December 8, 2015.

The market considers these companies to have good growth prospects. Tiffany expects its sales in fiscal 2016, ending January 31, 2016, to rise by a low-single-digit percentage on revenue of $4.2 billion in fiscal 2015. Fossil, by comparison, expects its fiscal 2015 sales to fall by 10.5% to 8%.

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Tiffany’s and its peers’ ETF exposures

Tiffany is a component of SPY. Tiffany, Signet Jewelers, and Fossil all have exposure in the iShares Russell 1000 Growth ETF (IWF) and the iShares Core S&P 500 ETF (IVV). Together, these companies form 0.12% of the portfolio holdings of IWF and 0.19% of the holdings of IVV.

IVV measures the performance of the large-cap (large capitalization) sector of the US equities market, tracking the top 500 stocks. IWF is a growth-oriented ETF. Tiffany and Signet together represent 2.1% of the SPDR S&P Retail ETF (XRT). Specialty retail companies make up 18.1% of XRT.

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