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Tiffany vs. Signet: Which Had the Better Earnings Season?
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Two of the major jewelry retailers, Tiffany & Co. and Signet Jewelers Limited (SIG - Free Report) , with a market cap of $9.23 billion and $6.51 billion, respectively, came out with their second-quarter results yesterday, before the market opened. However, despite operating in similar market conditions, there was a stark difference between their performances. While Tiffany sparkled, Signet lost its sheen. Shares of Tiffany gained 6.4%, while Signet saw a 12.6% plunge in its share price during the trading session yesterday. Let’s take a closer look.
On Earnings Front
A comparative analysis of the two stocks with regard to their earnings performance clearly shows that Tiffany hit the right chord while Signet missed the target.
After commencing fiscal 2016 on a soft note, Tiffany made a sharp comeback with better-than-expected bottom-line results in the second quarter. The company posted quarterly earnings of 84 cents a share that beat the Zacks Consensus Estimate of 71 cents but declined 2% from 86 cents posted in the year-ago period. Higher gross margin, lower selling, general and administrative expenses, and share repurchase activity did provide cushion to the bottom line, but failed to curb the year-over-year decline.
On the contrary, Signet succumbed to a negative earnings surprise in the second quarter of fiscal 2017, after registering a positive earnings surprise in the first quarter. The company’s quarterly earnings came in at $1.14 per share, down 11% from the prior-year quarter and also short of the Zacks Consensus Estimate of $1.47. Management hinted that tough market conditions, primarily in the energy-dependent regions, led to the debacle.
On the sales front, both stocks are struggling. While Tiffany has underperformed the Zacks Consensus Estimate in 5 out of the past 7 quarters, Signet has missed the same in all the trailing 7 quarters.
Coming to the recent quarterly performances, Tiffany reported net sales of $931.6 million that declined 6% from the year-ago period and also came in below the Zacks Consensus Estimate of $933 million. The decline in net sales was due to lower spending by both local customers and foreign tourists. Comparable-store sales (comps) declined 8%. In constant currencies too, net sales and comps fell 6% and 9%, respectively.
On the other hand, Signet generated total sales of $1,373.4 million, down 2.6% year over year and short of the Zacks Consensus Estimate of $1,444 million. Total sales on a constant currency basis dropped 1.3%. Comps declined 2.3% during the quarter on account of soft demand for its Zale (comps down 3%) and Sterling (comps down 3.1%) lines of jewelry. However, E-commerce sales grew 5.6% to $69.6 million.
On Outlook Front
Tiffany has maintained its outlook. Management continues to anticipate earnings per share for fiscal 2016 to decrease by a mid-single-digit percentage from the prior year. The company also reaffirmed that it expects fiscal 2016 worldwide net sales to decrease by a low-single-digit percentage.
On the other hand, a disappointing second-quarter performance compelled Signet to trim its guidance. The company now expects fiscal 2017 adjusted earnings in the range of $7.25−$7.55 per share, down from its prior view of $8.25−$8.55. For the third quarter, management projects earnings in the band of 17−25 cents a share. Signet now expects comps to decline in the range of 3% to 5% during the third quarter, and between 1% and 2.5% during fiscal 2017.
Bottom Line
A company is on the investors’ radar immediately after an earnings release. Hence, choosing stocks may appear a no-brainer to some investors. While better-than-anticipated results make it a favored pick, a lag on expectations hits investor sentiment. So, earnings releases prove to be the right time for investors to put money into stocks or disinvest.
Without a shadow of doubt, Tiffany, with a Zacks Rank #3 (Hold) has emerged as a winner this earnings season. Therefore, we suggest that you shift your focus from Signet for the time being, which carries a Zacks Rank #4 (Sell).
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Tiffany vs. Signet: Which Had the Better Earnings Season?
Two of the major jewelry retailers, Tiffany & Co. and Signet Jewelers Limited (SIG - Free Report) , with a market cap of $9.23 billion and $6.51 billion, respectively, came out with their second-quarter results yesterday, before the market opened. However, despite operating in similar market conditions, there was a stark difference between their performances. While Tiffany sparkled, Signet lost its sheen. Shares of Tiffany gained 6.4%, while Signet saw a 12.6% plunge in its share price during the trading session yesterday. Let’s take a closer look.
On Earnings Front
A comparative analysis of the two stocks with regard to their earnings performance clearly shows that Tiffany hit the right chord while Signet missed the target.
After commencing fiscal 2016 on a soft note, Tiffany made a sharp comeback with better-than-expected bottom-line results in the second quarter. The company posted quarterly earnings of 84 cents a share that beat the Zacks Consensus Estimate of 71 cents but declined 2% from 86 cents posted in the year-ago period. Higher gross margin, lower selling, general and administrative expenses, and share repurchase activity did provide cushion to the bottom line, but failed to curb the year-over-year decline.
TIFFANY & CO Price, Consensus and EPS Surprise
TIFFANY & CO Price, Consensus and EPS Surprise | TIFFANY & CO Quote
On the contrary, Signet succumbed to a negative earnings surprise in the second quarter of fiscal 2017, after registering a positive earnings surprise in the first quarter. The company’s quarterly earnings came in at $1.14 per share, down 11% from the prior-year quarter and also short of the Zacks Consensus Estimate of $1.47. Management hinted that tough market conditions, primarily in the energy-dependent regions, led to the debacle.
SIGNET JEWELERS Price, Consensus and EPS Surprise
SIGNET JEWELERS Price, Consensus and EPS Surprise | SIGNET JEWELERS Quote
On Sales Front
On the sales front, both stocks are struggling. While Tiffany has underperformed the Zacks Consensus Estimate in 5 out of the past 7 quarters, Signet has missed the same in all the trailing 7 quarters.
Coming to the recent quarterly performances, Tiffany reported net sales of $931.6 million that declined 6% from the year-ago period and also came in below the Zacks Consensus Estimate of $933 million. The decline in net sales was due to lower spending by both local customers and foreign tourists. Comparable-store sales (comps) declined 8%. In constant currencies too, net sales and comps fell 6% and 9%, respectively.
On the other hand, Signet generated total sales of $1,373.4 million, down 2.6% year over year and short of the Zacks Consensus Estimate of $1,444 million. Total sales on a constant currency basis dropped 1.3%. Comps declined 2.3% during the quarter on account of soft demand for its Zale (comps down 3%) and Sterling (comps down 3.1%) lines of jewelry. However, E-commerce sales grew 5.6% to $69.6 million.
On Outlook Front
Tiffany has maintained its outlook. Management continues to anticipate earnings per share for fiscal 2016 to decrease by a mid-single-digit percentage from the prior year. The company also reaffirmed that it expects fiscal 2016 worldwide net sales to decrease by a low-single-digit percentage.
On the other hand, a disappointing second-quarter performance compelled Signet to trim its guidance. The company now expects fiscal 2017 adjusted earnings in the range of $7.25−$7.55 per share, down from its prior view of $8.25−$8.55. For the third quarter, management projects earnings in the band of 17−25 cents a share. Signet now expects comps to decline in the range of 3% to 5% during the third quarter, and between 1% and 2.5% during fiscal 2017.
Bottom Line
A company is on the investors’ radar immediately after an earnings release. Hence, choosing stocks may appear a no-brainer to some investors. While better-than-anticipated results make it a favored pick, a lag on expectations hits investor sentiment. So, earnings releases prove to be the right time for investors to put money into stocks or disinvest.
Without a shadow of doubt, Tiffany, with a Zacks Rank #3 (Hold) has emerged as a winner this earnings season. Therefore, we suggest that you shift your focus from Signet for the time being, which carries a Zacks Rank #4 (Sell).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>