Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Tiffany & Co. (TIF), Electronic Arts Inc. (EA): Will YTD Success Bode Well Long Term?

Page 1 of 2

We have all heard the saying, “Buy low, sell high,” but the mystery still remains as to what that “high” or “low” really is. That’s something that people could argue to their grave, but we will likely never know the answer until we see the results through a pair of spectacles known as hindsight. These next few companies have all increased by impressive amounts YTD, but will they continue in that direction long-term?


TIF data by YCharts

As you can see, most of these companies have more than doubled the S&P 500 so far this year. Tiffany & Co. (NYSE:TIF) is a company that has firsthand knowledge of the ups and downs of the market. It was founded in September of 1837 and went public in 1987. With a market cap of $8.8 billion, the company has seen revenues increase eight of the past ten years for a total of 213%. In 2012, the stock was down nearly 12%, and it currently shows a P/E of 21.  Its free cash flow (FCF) yield of .4% doesn’t seem very appealing for bargain investors. Growth investors may find Tiffany slightly more appealing, however I wouldn’t expect to see growth like we have so far in 2013 continue for long.

Tiffany & Co. (NYSE: TIF)

Signet Jewelers Ltd. (NYSE:SIG) jewelers shows very similar revenues to those of Tiffany & Co. (NYSE:TIF), however its market cap is $3.8 billion smaller. The last time the stock decreased over the period of a year was in 2008 when it lost 68.92%. Since 2003 Signet’s revenues and FCF have increased approximately 42% and 234%, while its gross margins have increased from 17.2 to 38.3. It’s always good to see three metrics increase over time. Although its P/E could be lower, it’s a solid 15.1; the forward P/E is 13.8; and its 3.7% FCF yield offers a much better bargain than its competitor. With a fair P/E, a reasonably average FCF yield, and revenues increasing consistently, I would be much more likely to invest in a company like Signet than Tiffany.

Page 1 of 2
Loading Comments...