Ratings summary and price target
The majority of analysts providing recommendations for Tiffany (TIF) stock maintain a neutral outlook. They believe that weak volumes due to soft store traffic and increased competition from low-priced fashion jewelry will continue to affect Tiffany’s top-line performance. The company has managed to grow sales, although at a slower rate, despite the tough operating environment. Expansion of its distribution capabilities and efficient marketing will support sales growth.
Analysts have a consensus rating of 2.4 for Tiffany stock. That’s based on a scale of 1.0 to 5.0, where 1.0 stands for “strong buy” and 5.0 stands for “strong sell.” Of the 26 analysts covering the stock, 46.0% recommend a “buy,” and 54.0% maintain a “hold” as of August 18, 2017. Tiffany stock closed at $88.03 on Friday, August 18, reflecting a 7.6% upside to analysts’ 12-month price target of $94.76 per share.
In comparison, 38.0% of the 13 analysts covering Signet (SIG) stock maintain a “buy,” and 62.0% recommend a “hold.”
As of August 18, 2017, Tiffany stock was trading at a forward PE (price-to-earnings) ratio of 21.9x, which is significantly above rival Signet’s forward PE multiple of 7.9x. Tiffany is also trading at a higher valuation multiple than the S&P 500 Index (SPX-INDEX), which was trading at 17.8x on the same day.
Tiffany’s high valuation is warranted since the company remains well-positioned to drive a balanced top- and bottom-line growth in the coming quarters with the recovery in consumer spending. The company has managed to grow sales and profitability in the past several quarters despite a weak industry trend. On the other hand, Signet failed to impress on the sales and margins front. For the current fiscal quarter, Signet’s sales and EPS (earnings per share) are expected to fall on a year-over-year basis.