What Does Billionaire Dan Loeb See In Tiffany & Co. (TIF)?

We can also compare Tiffany & Co. (NYSE:TIF) to online jewelry retailer Blue Nile Inc (NASDAQ:NILE) and upscale accessories provider Coach, Inc. (NYSE:COH). Blue Nile Inc (NASDAQ:NILE) has been reporting excellent numbers, but remains a popular short target (the most recent data shows 26% of the float held short). With a forward earnings multiple of 36 we certainly see why many market players are bearish and despite recent growth don’t think it is a buy right now. Coach, Inc. (NYSE:COH) is valued at 16 times its trailing earnings, and it has been delivering modest growth rates going by its most recent 10-Q; that company might also be worth looking at on a value basis. Coach, Inc. (NYSE:COH), as it happens, has fallen in price over the last year against a rising market.

Tiffany seems to be priced with the expectation that the company’s earnings will rose sharply going forward, and with recent performance not really bearing that out we think that Loeb and his team are taking a risk here. Even if the jewelry industry picks up strongly, we think that Signet Jewelers Ltd. (NYSE:SIG)’s discount to Tiffany- not to mention the fact that that company’s business seems to be doing a bit better in any case- would make it a more attractive target for investors.

Disclosure: I own no shares of any stocks mentioned in this article.