Tiffany & Co. (NYSE:TIF) is the famous “blue box” specialty jeweler, but it’s also heavily tied to the economy. However, with a rebounding economy, is now a good time to invest in the jewelry company? The other big tailwind to the stock could be a potential buyout.
I’m like cat here, a no-name slob. We belong to nobody, and nobody belongs to us. We don’t even belong to each other. – –Holly Golightly, Breakfast At Tiffany’s
This quote may no longer apply to the famous specialty retailer, with Tiffany & Co. (NYSE:TIF) being a potential buyout candidate. Tiffany’s $9.37 billion enterprise value means the company could easily be snatched up by one of the major retailers.
Gamco Investors’ CIO, Howard Ward, has also noted that “sooner or later someone will make a run at Tiffany…there are some obvious foreign luxury brand companies that would be interested.”
|Fossil Inc (NASDAQ:FOSL)||21%|
Signet Jewelers Ltd. (NYSE:SIG) is a specialty retail jeweler in the United States and United Kingdom. Signet managed to post last quarter EPS of $2.12, compared to the $1.79 for the same quarter last year, on the back of 3.5% higher same-store sales and 12% higher total sales. The company sees 5%-7% higher same-store sales next quarter.
This positive performance is also a positive for Tiffany & Co. (NYSE:TIF), given that these are two of the only remaining major traditional specialty retail jewelers. Signet Jewelers Ltd. (NYSE:SIG) does have sales roughly $70 million greater than Tiffany, but Tiffany has a gross margin of nearly 58%, compared to Signet’s 38%.
Signet remains debt free and has a compelling valuation. Signet Jewelers Ltd. (NYSE:SIG) is trading at a forward P/E ratio of 12.6 and PEG ratio of 1.3 compared to 18.3 and 1.7 for Tiffany & Co. (NYSE:TIF).
Fossil Inc (NASDAQ:FOSL) is a global designer, marketer and distributor specializing in consumer fashion accessories. Fossil managed to post 2012 results that included earnings of $5.39 per share, which was up 16.9% from the year-ago earnings of $4.61 per share, but lagging management’s guidance of $5.42 to $5.45 per share.