The Zacks Analyst Blog Highlights: Tiffany, Signet Jewelers, Ross Stores And Wal-Mart Stores

For Immediate Release

Chicago, IL – December 11, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includeTiffany & Co. (NYSE:TIF) , Signet Jewelers Limited (NYSE:SIG) , Ross Stores, Inc. (NASDAQ:ROST) and Wal-Mart Stores, Inc. (NYSE:WMT) .

Here are highlights from Friday’s Analyst Blog:

Tiffany's Surges 24% YTD: What's Behind the Stock's Rally?

Tiffany & Co., which holds a significant position in the world jewelry market owing to its distinctive brand appeal, has outperformed the Zacks Retail-Jewelry Industry so far in the year. The company’s omni-channel platform, store expansion plans, tapping of new markets and venture into new revenue generating areas have been the primary driving factors.

Year to date, the stock has surged 23.7%, against the industry’s decline of 2.6%. Additionally, the stock’s long-term earnings growth rate of 10.8% and a VGM Score of B reflect its inherent strength.

Catalysts Working Behind the Stock

Tiffany is well positioned to augment both its top and bottom-line performance in the long run by leveraging capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes. The company is steadily introducing new jewelry designs, new watch collection and fragrance, and additional jewelry SKUs. It also introduced “build-your-own program” on its website under which customers are allowed to personalize their own charm bracelets.

With nearly half of the total sales generated internationally, we believe that the company is well diversified from a regional perspective as well. Tiffany is also focusing on enhancing omni-channel platform. Previously, it had notified that its long-term objective is to attain ROA of at least 10% and ROE of at least 15%.

The company is focused on opening smaller stores that offer selected collections of lower priced higher-margin product, which in turn boosts store productivity. Tiffany concentrates on improving sales per square foot through an increase in customer traffic and converting them into potential buyers by targeted advertising, ongoing sales training and customer-oriented initiatives. Management anticipates gross retail square footage growth of 2% in fiscal 2017.

Positive Earnings Surprise Streak

Tiffany delivered sixth straight quarter of positive earnings surprise, when it posted third-quarter fiscal 2017 results. Net sales also grew and beat the consensus mark for the second successive quarter. The company registered sturdy sales in the Fashion Jewelry and the High, Fine & Solitaire Jewelry categories.

Management continues to anticipate fiscal 2017 earnings per share to increase by a high-single digit percentage from fiscal 2016 earnings of $3.55. However, it expects earnings to jump mid-single digit percentage over adjusted earnings of $3.75 per share reported in fiscal 2016. Tiffany now envisions fiscal year net sales to increase by a low-single-digit percentage on a reported and constant-exchange-rate basis.

Hurdles to Overcome

Management had earlier guided SG&A expenses for the fiscal year to increase at a marginally higher rate than sales on account of sustained investment in new signature women's fragrance, launch of new luxury accessories offerings and additional jewelry SKUs. This may strain margins to an extent. We noted that in the first, second and third quarters of fiscal 2017, SG&A expenses had increased 0.2%, 3.7% and 3.3%, respectively.

We also note that the company's comparable-store sales have been struggling for quite some time now. In the first, second and third quarters of fiscal 2017, comps have declined 3%, 2% and 1%, respectively. However, the rate of decline has decelerated sequentially. Further, a mature domestic market, cautious consumer spending, foreign currency headwinds and stiff competition from Signet Jewelers Limited continue to pose concerns.

Taking the pros and cons into consideration, the stock currently carries a Zacks Rank #3 (Hold).

2 Stocks Hogging the Limelight

Ross Stores, Inc. delivered an average positive earnings surprise of 5.5% in the trailing four quarters. It has a long-term earnings growth rate of 10% and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wal-Mart Stores, Inc. delivered an average positive earnings surprise of 2.2% in the trailing four quarters. It has a long-term earnings growth rate of 6.1% and carries a Zacks Rank #2.

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