Thursday, July 19, 2012

Tiffany (TIF) 2012 Review

Tiffany & Co (TIF) is an internationally known retailer, designer and manufacturer of fine jewelry, silverware, china, crystal and gift items.

The company has grown profits and dividends at a 10-20% rate over the last 10 years earning a 14-19% return on equity. 2009 was a difficult year for TIF, made especially so by management’s hesitancy to discount and the decline in spending by foreign tourists. However, 2010 rebounded strongly and profits have continued to grow as a result of:

(1) rising sales made possible by rising capital expenditures in its distribution, manufacturing and diamond sourcing process,

(2) increased penetration in international markets,

(3) expansion in new store openings,

(4) a growing customer base resulting from opening a line of new smaller stores with lower priced, higher margin products,

(5) stock buyback program.

(1) earnings from its foreign operations are exposed to currency fluctuations,

(2) recent disruptions in foreign capital markets could impact its ability to financial future growth,

(3) its customers are sensitive to macroeconomic events.

TIF is rated A by Value Line, carries a 19% debt to equity ratio and its stock yields over 1.8%.

Statistical Summary

Stock YieldDividend Growth RatePayout Ratio # Increases Since 2002

Debt/EquityROEEPS Down Since 2002 Net MarginValue Line Rating

*many retailers do not pay a dividend.


Note: TIF stock made good progress off its March 2009 low, surpassing the downtrend off its October 2007 high (red line) and the November 2008 trading high (green line). Long term, the stock is in an uptrend (straight blue lines). Recently, it fell below the lower boundary of an intermediate term trading range (purple lines) and is now in a downtrend. The wiggly blue lines are Bollinger Bands. The Dividend Growth Portfolio owns a full position in TIF; though if the stock trades below $53, it may reduce its exposure on a trading basis. The upper boundary of its Buy Value Range is $26; the lower boundary of its Sell Half Range is $105.

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.