Tiffany`s demand for luxury goods and earnings per share have dropped

Tiffany & Co`s share price has plummeted since its top in January 2015. The share price has dropped from over $100 to about $60. The main reason for that is the global softening demand for luxury goods.

The demand for jewelry has declined in the past few years, led y a strong U.S dollar, weakness in China and changing spending habits. Earnings at Tiffany has been falling for 4 consecutive quarters. The stock has been following the earnings.

 

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Currency headwinds negatively impact both non-US sales and tourist spending in the United States. Early indications are these problems will persist throughout fiscal 2016. In its most recent analyst call, management guided minimal growth on a constant currency basis with earnings ranging from unchanged to a mid-single digit decline.

There are a number of bright spots for Tiffanys. The companys effort to bolster its omnichannel platform and open new stores should bode well. On a constant currency basis, sales and comparable store sales increased across its international markets like Japan, Asia-Pacific and Europe.

The Estimize consensus is calling for earnings of 69 cents per share on $922,7 million in revenue, a penny higher than Wall Street on the bottom line but $2,5 million below on the top. Earnings per share estimates have dropped 13% in the past three months on negative sentiment heading into the Q1 report. Compared to a year earlier, this reflects a 15% decline in EPS with revenue projected to fall 4%.

The shares of Tiffany`s have dropped 25,5% over the past 52 weeks, but the majority of analysts maintain a «strong buy» on the underperformer, while the average 12-month price target of $81,29 stands at a 26% premium to current trading levels.

If Tiffany continue to struggle, analysts will continue to be negative on the stock.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

 

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