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What’s in the Offing for Tiffany Stock?

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Jan. 2 2019, Updated 11:20 a.m. ET

What Tiffany’s current valuation indicates

Shares of Tiffany & Co. (TIF) are trading at a multiyear low owing to the recent fall in its stock price. Tiffany stock is trading at a forward PE multiple of 15.9x, ~25% lower than its four-year average multiple of 21.3x.

Wall Street expects Tiffany to sustain top and bottom line growth momentum in 2019. Analysts expect its top line to rise ~5% in fiscal 2019, while they expect its bottom line to rise 9%.

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Tiffany will face tough year-over-year comps in the first half of fiscal 2019, which could restrict its growth rate. The company’s planned investment in growth measures is also expected to remain a drag on its earnings. Moreover, a strong US dollar could hurt tourist spending and, in turn, the company’s top line growth rate.

Factors affecting Tiffany’s financials

We expect Tiffany to sustain its sales momentum in fiscal 2019 driven by its worldwide square footage expansion, new product launches, omni-channel offerings, in-store initiatives, and marketing support. However, adverse currency rates and tough comparisons—especially in the first half—could play spoilsport. Tiffany’s margins could continue to expand due to improved comparable sales and lower rough diamond acquisition costs.

Tiffany’s bottom line is expected to benefit from improved sales and higher margins. However, increased selling, general, and administrative expenses driven by higher spending on technology and marketing could remain a drag and restrict the company’s bottom line growth.

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