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Check Out Tiffany's (TIF) Probability to Beat Q3 Earnings

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Tiffany & Co. (TIF - Free Report) is slated to report third-quarter fiscal 2018 results on Nov 28. In the trailing four quarters, this designer, manufacturer and retailer of jewelry and other items has outperformed the Zacks Consensus Estimate by an average of 15.1%. In the last reported quarter, the company delivered a positive earnings surprise of 17%.

Investors are counting on another estimate beat by Tiffany in the to-be-reported quarter. Let’s delve deeper and take a look at the factors that will be influencing the results.

How Are Estimates Shaping Up?

After registering a bottom-line increase of about 27% in the second quarter of fiscal 2018, Tiffany is likely to record year-over-year decline of roughly 5% in the third quarter. The Zacks Consensus Estimate for the quarter under review is pegged at 76 cents compared with 80 cents reported in the year-ago quarter.

We note that the Zacks Consensus Estimate has been stable in the last 30 days. The Zacks Consensus Estimate for revenues is pegged at $1,053 million, up from $976.2 million in the year-ago quarter.

Tiffany & Co. Price, Consensus and EPS Surprise

Key Factors

Tiffany is well positioned to augment its top-line performance in the long haul by leveraging capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes. The company is also looking at other revenue generating avenues. It also intends to expand distribution network by adding stores in both new and existing markets. The company is focused on opening smaller stores that offer selected collections of lower priced higher-margin product, which in turn boosts store productivity.

The company is gradually coming up with new jewelry designs, range of watches and fragrance. It has also introduced “build-your-own program” on its website under which customers are allowed to personalize their charm bracelets. Further, Tiffany is enabling customers to customize rings.

Despite the company’s efforts to bolster the top line, rising SG&A expenses may dent operating margin. In this regard, we note that management expects fiscal 2018 SG&A expenses to increase at a rate higher than sales on account of increased spending on technology, marketing communications, visual merchandising, digital and store presentations. We noted that in the first and second quarter of fiscal 2018, SG&A expenses rose 9.1% and 20% year over year, respectively.

What’s the Probability of Earnings Beat?

Our proven model does not conclusively show that Tiffany is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tiffany has a Zacks Rank #2 but an Earnings ESP of 0.00%. Consequently, making surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat.

Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +2.95% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

RH (RH - Free Report) has an Earnings ESP of +1.78% and a Zacks Rank #2.

The Michaels Companies, Inc. (MIK - Free Report) has an Earnings ESP of +2.86% and a Zacks Rank #3.

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