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Tiffany Stock Rose despite Mixed Q1 Results

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Jun. 5 2019, Updated 7:32 a.m. ET

Tiffany stock

On June 4, Tiffany (TIF) posted mixed first-quarter results for the period ending April 30. The company’s top line was slightly lower than analysts’ estimate and fell for the second consecutive quarter. The bottom line also registered a YoY (year-over-year) decline but beat analysts’ estimate. Persisting challenges are expected to hurt Tiffany’s sales and earnings in the second quarter. The company’s management lowered its fiscal EPS guidance.

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Despite the weak sales performance, lower margins, and guidance cut, Tiffany stock closed 2.6% higher. Investors didn’t think that Tiffany’s first-quarter results were that bad. The operating environment is challenging amid the US-China trade war and the stronger US dollar. Tiffany raised its quarterly dividend 5%, which lifted investors’ sentiment.

We didn’t find positives in Tiffany’s financial performance. The comparable sales fell across all of the reportable segments. The company’s gross margins fell. Tiffany’s sales and earnings are expected to be weak in the second quarter.

However, Tiffany’s low valuation, the expectation of improved earnings in the second half of fiscal 2019, and a dividend yield of 2.5% provide some comfort.

YTD stock performance

Tiffany shares have risen 14.9% on a YTD (year-to-date) basis as of June 4. The shares have generated better returns than the broader markets. Recently, Tiffany stock took a significant beating due to the challenging operating environment.

Signet Jewelers (SIG) shares have fallen 35.3% in 2019, which reflects continued weakness in its sales and earnings.

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