Tiffany Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of high-end jewelry peddler Tiffany (NYS: TIF) were sparkling like diamonds today as investors pushed the stock up as much as 10% in intraday trading after the company reported strong second-quarter results.

So what: Tiffany was nice and helpful in giving an earnings release headline that summed up the situation very nicely: "Tiffany Reports Substantially Higher-Than-Expected Sales and Earnings Growth in Its Second Quarter." Whew! That makes my job easier.

Wait, you want more detail?

OK, fine. For the quarter, sales were up a whopping 30% to $873 million. Sales growth got a 6% boost from currency exchange and new stores, but same-store sales were still up a very-impressive 22%. Though the (non-Japan) Asia-Pacific region was particularly strong, sales growth looked great all over the world for Tiffany.

After adjusting for the costs of the company's headquarters relocation, second-quarter earnings per share were $0.86, a 58% jump from last year. Wall Street analysts were caught completely by surprise -- they were expecting sales of just $785 million and per-share earnings of $0.70.

Now what: What's better than one big shiny diamond? How about ... two? The company complimented the show-stopping second-quarter results with a similarly strong full-year guidance boost. For the year, the Tiffany now expects to see earnings per share of $3.65 to $3.75 versus a previous range of $3.45 to $3.55. On average, analysts had estimated $3.56 in full-year EPS. The bottom line is expected to be driven by a soaring top line, which the company sees growing by "a high-teens percentage."

Can you put a price on this kind of performance? As investors, we have to. Using the midpoint of management's new guidance, Tiffany's stock is trading at roughly 19 times full-year 2011 earnings. Like the wares in its stores, that ain't cheap. Continued speedy growth could make that a worthwhile price, but investors will want to take a hard look at the numbers before mashing that "buy" button.

Want to keep up to date on Tiffany?Add it to your watchlist.

At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferdoes not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter@KoppTheFoolorFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story