Stock of the day 26/05/2015 – Card Factory PLC/Tiffany & Co/ Costco Wholesale Corp

Earnings season only has a few stragglers left with a mixed bag of cards, diamonds and discount deals all set announce their latest results on Wednesday.

Investors will find out whether they should send commiserations or congratulations in the post when Card Factory PLC reveals its latest Q1 2015 trading statement release on Wednesday. The company has seen an almost constant rise since it was floated last May, when it opened at £2.02 after an initial offering of £2.25 per share. However, this disappointing debut has given way to solid gains, with Card Factory hitting a 2014 peak of £2.92 the week before the New Year. In 2015 Card Factory suffered a rather flat two and a half months where at points the stock traded at a low of £2.56. Since mid-March, however, Card Factory has had a spring in its step, rising from $£2.71 on March 13th to a current trading price of £3.41, just below its all-time high of £3.44 reached last week.


(Source: IT-Finance.com 26/05/2015)

The most persistent rumour surrounding Card Factory this year is the company’s supposed interest in up-market rival Paperchase. Reports that Card Factory was eyeing the Primary Capital-owned company began to circulate back in January without actually materialising into anything concrete. Talk was reignited towards the end of March when Card Factory announced its full year results, with CEO Richard Hayes enigmatically stating that ‘I think if you look at the business historically we have acquired businesses…I would not rule anything in and I would not rule anything out’ when asked about Paperchase. Details on any potential deal will be a key feature investors will be looking out for when Card Factory releases its trading statement.

In terms of its aforementioned full-year results, Card Factory announced an impressive 9% rise in profits, but disappointed investors by posting a slip in like-for-like sales alongside failing to disclose details on its future cash returns policy, leading to a 4% drop in its stock price. Since then the stock has more than recovered those losses, and received a post-election boost after fears that the minimum wage would be raised under a Labour government disappeared. It will be interesting to see whether Card Factory’s latest statement can push the stock beyond the record highs seen last week.

It hasn’t been a sparkling 2015 for Tiffany & Co, which announces its Q1 2015 earnings release on Wednesday. After hitting an all-time high of $110.55 at the end of November, the jewellery company opened the New Year at $106.94. Since then things have failed to match the performances it has seen over the past couple of years, with that opening price its current year high. Around 17% in declines over 2 days, with 14% on the 12th January alone, occurred when the company announced its holiday sales had bitterly disappointed, especially in Japan and the Middle East. Since then Tiffany has failed to really break out of a $5 trading band between $84 and $89, with a decline to $82.80 at the end of March and a rise to $90.51 in the middle of April being the only real price departures. Tiffany has a current trading price of $86.92.


(Source: IT-Finance.com 26/05/2015)

The jewellery business, like other more explicitly commodity-driven sectors, has to be aware of issues surrounding sustainability, especially the tolls, be it social or environmental, of mining. Due to this Tiffany has appointed its first ever Chief Sustainability Officer Anisa Kamadoli Costa in order to secure a the vaguely oxymoronic ‘sustainable luxury’, a term that perhaps flies in the face of the very sustainability it is trying to ensure.

Its last set of results on March 20th saw beat earnings per share estimates of $1.51 by a cent, a figure higher than the $1.47 posted in the same quarter the previous year, whilst seeing a 1% decline in year-on-year revenue. In terms of Wednesday’s results, Tiffany is expected to post earnings per share of $0.69, compared to $0.97 year-on-year alongside a 9% decline in revenue from $1.01 billion to $918.7 million. Yet analysts clearly feel Tiffany & Co is undervalued, with the company receiving a consensus rating of ‘buy’ with an average target price of $103.67.

Finally, after misses for Wal-Mart and bested expectations for Target, investors will discover where upstart Costco Wholesale Corp lies in the mega-store landscape when it announces its Q3 2015 earnings release on Wednesday. A fairly flat first 9 months in 2014 eventually gave way to some faster growth in the final few months of the year, with the stock starting January at $118.83 before entering 2015 at $142.53. The New Year has replicated some of the start of 2014’s flatness, hitting a low of $138.46 towards the end of January before spiking to $156.84 at the start of February after announcing a special dividend. Since then the stock has faltered slightly, slowly declining to a current trading price of $143.69.


(Source: IT-Finance.com 26/05/2015)

Come Wednesday Costco is expected to post earnings per share expected to be $1.16, up from $1.09 year-on-year alongside a 3% increase in revenue from $25.79 billion to $26.67 billion; this compares year-on-year rises of 7% in the first quarter and 6% in the second quarter. This consistent growth has led analysts to be bullish on the stock, giving Costco Wholesale a consensus rating of ‘buy’ with a target price of $149.50.