Tiffany & Co. Equity Valuation and Analysis
Valued at April 1, 2005
Chelsea Fitzgerald: chelsea.fitzgerald@ttu.edu Whitney Valdes: whit2884@hotmail.com Eric Richardson: ericwrichardson2000@yahoo.com Sean Bancroft: seanbancroft@yahoo.com Kristen Weaver: kristen.m.weaver@ttu.edu
Tiffany & Co. Valuation Table of Contents Executive Summary Business/Industry Analysis Accounting Analysis Ratio Analysis/Forecasting Cross Sectional Analysis Forecasted Financials Valuation Analysis Cost of Capital Intrinsic Valuations Appendices Appendix A Appendix B Appendix C Appendix D References 2 5 14 25 28 37 41 44 46 57 57 60 66 69 72
-1-
EXECUTIVE SUMMARY
Investment Recommendation: Over-valued, Sell
TIF – NYSE 52 week range Revenue (2004) Market Capitalization Shares Outstanding Dividend Yield 3-month Avg Daily Trading Volume Percent Institutional Ownership Book Value Per Share (mrq) ROE ROA Est. 5 year EPS Growth Rate Cost of Capital Est. R2 Ke Estimated 5-year .3175 3-year .5676 2-year .4929 Published Kd WACC Beta 2.59 2.17 2.86 2.071 $33.37 $27.00-41.63 $2.2 Bil. $4.86 Bil 145,730,000 .72% 1,186,500 90.29% $2.84 19.36% 11.81% 11.30% Ke 12.34% 12.34% 11.13% 10.11% 10.79% 3.09% 8.77% EPS Forecast FYE 1/31 EPS
4/1/05
2004(A) $1.48
2005E $1.66
2006E $1.89
2007E $2.12 Industry 14.11 12.09 .96 1.51
Ratio Comparison Trailing P/E Forward P/E Forward PEG M/B
Tiffany 16.02 19.22 1.49 2.89
Valuation Estimates
Actual Current Price Ratio Based Valuations P/E Trailing P/E Forward PEG Forward Dividend Yield M/B Ford Epic Valuation Intrinsic Valuations Discounted Dividends Free Cash Flows Residual Income Abnormal Earnings Growth Long-Run Residual Income Perpetuity $33.37 $19.47 $30.50 $13.21 N/A $14.40 $35.94 $1.60 $14.84 $12.35 $13.84 $17.13
-2-
Tiffany & Co. is established as one of the world’s top retailers of fine jewelry and other luxury items. They have created a place in the market based upon their commitment to quality and customer...