Beruflich Dokumente
Kultur Dokumente
Recommendation: BUY
Team #10:
Owen Gilmore
Jerry Jiang
Ziv Israel
presented by
RECOMMENDATION: BUY
Current Price: $98.00
Target Price: $126.40
Est. Timing: 2+ years
Upside: 29%
IRR: 11.6%
8.0%
$1,651
Terminal multiple
Terminal value
Present value of the terminal value
10.7x
$18,234
15,258
3.5%
Enterprise value
Plus: Net cash
Equity value
$16,909
($658)
$16,251
Diluted shares:
128.6
$126.37
Price Target
Implied upside
$126.40
29.0%
| Page 1
Jack Ferraro, MBA
70
presented by
presented by
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
55.7%
12.7%
18.7%
9.6%
3.2%
100.0%
52.1%
15.7%
18.9%
11.3%
2.0%
100.0%
51.0%
17.8%
17.7%
11.7%
1.8%
100.0%
49.6%
20.5%
16.9%
11.6%
1.4%
100.0%
48.5%
21.4%
16.8%
11.4%
1.9%
100.0%
47.8%
23.4%
14.4%
11.7%
2.8%
100.0%
| Page 3
Source: Capital IQ
presented by
| Page 4
presented by
| Page 5
presented by
INVESTMENT THESIS
C
O
T
I
N
U
E
D
O
R
G
A
N
I
C
G
R
O
W
T
H
| Page 6
Jack Ferraro, MBA
70
presented by
presented by
presented by
| Page 9
presented by
presented by
| Page 11
presented by
| Page 12
Source: goldprice.org
presented by
Source: tiffany.com
presented by
presented by
VALUATION
Tiffanys slightly expensive based on its historical
TEV/LTM EBITDA multiple
Currently 12.4x vs average of 10.6x
| Page 15
presented by
MktCap
(M US$)
Price
(loc)
TIFFANY & CO
SIGNET JEWELERS
SWATCH GROUP-BR
DOMINION DIAMOND
RALPH LAUREN COR
COACH INC
BURBERRY GROUP
HERMES INTL
LVMH MOET HENNES
KERING
PRADA S.P.A.
CHRISTIAN DIOR
MICHAEL KORS HOL
12,575
9,669
24,953
1,159
14,825
9,152
10,717
32,707
85,681
24,779
15,727
32,189
14,944
97.30
120.50
448.80
15.59
169.04
33.26
1,517.00
249.00
135.65
157.85
47.65
142.05
72.70
YTD
(%)
4.8
53.2
(23.7)
2.2
(4.3)
(40.8)
0.1
(5.4)
2.4
2.8
(30.9)
3.7
(10.4)
PE FY0
22.7x
24.2x
13.5x
32.8x
19.9x
11.6x
20.6x
31.6x
20.2x
23.6x
22.5x
17.9x
19.1x
PE FY1
22.4x
21.9x
15.5x
15.3x
19.8x
17.7x
19.6x
30.1x
19.8x
16.6x
23.0x
16.9x
17.5x
PE FY2
19.6x
18.2x
13.9x
20.2x
17.2x
16.3x
18.0x
26.7x
17.6x
14.3x
20.3x
13.7x
15.1x
PB FY0
4.3x
3.6x
2.5x
0.9x
3.7x
3.8x
5.8x
8.9x
2.5x
1.9x
4.7x
2.2x
6.7x
PB FY1
4.1x
3.4x
2.3x
0.8x
3.6x
3.6x
4.8x
7.7x
2.4x
1.8x
4.2x
2.3x
5.6x
PB FY2
3.6x
2.9x
2.0x
0.8x
3.3x
3.3x
4.2x
6.4x
2.2x
1.6x
3.7x
2.0x
4.1x
14ROE
(%)
15ROE
(%)
18.1
14.8
15.5
5.0
18.3
19.7
26.6
27.8
12.5
10.3
19.1
14.2
36.8
20.0
16.3
15.3
3.5
19.6
21.8
25.0
25.8
13.5
11.8
19.1
12.3
30.6
22.2
16.7
8.9
3.9
10.4
7.2
10.5
18.1
10.2
12.0
11.7
6.8
11.8
11.7
13.4
10.0
3.0
10.2
8.7
10.8
17.3
10.5
12.0
12.0
7.0
9.9
10.5
11.5
9.0
3.6
9.2
8.0
9.9
15.3
9.5
10.6
10.7
6.6
8.5
18.9
(0.0)
15.6
30.4
31.7
10.5
7.3
20.2
9.6
| Page 16
Jack Ferraro, MBA
70
presented by
$2,849
628
(136)
$492
$2,710
579
(139)
$440
$3,085
759
(148)
$611
$3,643
897
(146)
$751
$3,794
861
(164)
$697
$4,031
975
(181)
$794
2015e
2016e
2017e
$4,481
1,190
(203)
$987
$4,964
1,440
(215)
$1,225
$5,460
1,702
(228)
$1,474
Operating Margin
17.3%
16.2%
19.8%
20.6%
18.4%
19.7%
22.0%
24.7%
27.0%
Less: Taxes
Tax-effected EBIT
$134
$359
$124
$316
$179
$432
$226
$525
$227
$470
$73
$720
$345
$642
$429
$796
$516
$958
$136
154
$139
75
(276)
$656
$2.14
$148
127
269
$184
$2.91
$146
239
439
($7)
$3.45
$164
220
251
$163
$3.28
$181
222
184
$496
$1.42
$203
242
100
$502
$4.65
$215
265
100
$646
$5.85
$228
290
100
$796
$7.11
$340
| Page 17
Jack Ferraro, MBA
70
presented by
8.0%
$1,651
8.0%
$1,651
3.5%
$18,234
$15,258
Terminal multiple
Terminal value
Present value of the terminal value
10.7x
$18,234
15,258
10.7x
Enterprise value
Plus: Net cash*
Equity value
$16,909
($658)
$16,251
3.5%
Enterprise value
Plus: Net cash
Equity value
$16,909
($658)
$16,251
Diluted shares:
128.6
Diluted shares:
128.6
$126.37
$126.37
$98.00
Price Target
Implied upside
$126.40
29.0%
| Page 18
Jack Ferraro, MBA
70
presented by
Terminal
Growth
Rate
##
2.50%
3.00%
3.50%
4.00%
4.50%
7.00%
$128.47
$144.19
$164.41
$191.36
$229.10
7.50%
$115.13
$127.63
$143.26
$163.35
$190.14
8.00%
$104.21
$114.37
$126.80
$142.33
$162.30
8.50%
$95.10
$103.52
$113.63
$125.98
$141.42
9.00%
$87.39
$94.48
$102.85
$112.89
$125.17
| Page 19
Jack Ferraro, MBA
70
presented by
$2,849
628
(136)
$492
$2,710
579
(139)
$440
$3,085
759
(148)
$611
$3,643
897
(146)
$751
$3,794
861
(164)
$697
$4,031
975
(181)
$794
2015e
2016e
2017e
$4,316
1,091
(203)
$888
$4,627
1,211
(215)
$996
$4,959
1,342
(228)
$1,113
Operating Margin
17.3%
16.2%
19.8%
20.6%
18.4%
19.7%
20.6%
21.5%
22.5%
Less: Taxes
Tax-effected EBIT
$134
$359
$124
$316
$179
$432
$226
$525
$227
$470
$73
$720
$311
$577
$349
$647
$390
$724
$136
154
$139
75
(276)
$656
$2.14
$148
127
269
$184
$2.91
$146
239
439
($7)
$3.45
$164
220
251
$163
$3.28
$181
222
184
$496
$1.42
$203
242
100
$438
$4.15
$215
265
100
$497
$4.69
$228
290
100
$561
$5.28
$340
| Page 20
Jack Ferraro, MBA
70
presented by
8.0%
$1,278
8.0%
$1,278
3.2%
$12,032
$10,069
Terminal multiple
Terminal value
Present value of the terminal value
9.0x
$12,032
10,069
9.0x
Enterprise value
Plus: Net cash*
Equity value
$11,346
($658)
$10,688
3.2%
Enterprise value
Plus: Net cash
Equity value
$11,346
($658)
$10,688
Diluted shares:
128.6
Diluted shares:
128.6
$83.11
$83.11
Price Target
Implied upside
$83.10
(15.2%)
$98.00
| Page 21
Jack Ferraro, MBA
70
presented by
Terminal
Growth
Rate
##
2.20%
2.70%
3.20%
3.70%
4.20%
7.00%
$84.50
$94.17
$106.40
$122.32
$143.94
7.50%
$76.13
$83.93
$93.55
$105.70
$121.53
8.00%
$69.20
$75.62
$83.37
$92.93
$105.01
8.50%
$63.37
$68.73
$75.11
$82.82
$92.32
9.00%
$58.39
$62.94
$68.27
$74.61
$82.28
| Page 22
Jack Ferraro, MBA
70
presented by
INVESTMENT SUMMARY
Tiffany & Co. presents an attractive opportunity
Strong Asia-Pacific revenue growth, driven by
increased units sold and greater revenue per unit, will
become significant top-line contributor
Improving gross margins will lead to improved net
margins and strong free cash flow
Tiffanys leadership in product innovation creates
opportunities for new revenue lines
Tiffany & Co. strong BUY with 29% upside (11.6% IRR)
| Page 23
Jack Ferraro, MBA
70
presented by
INVESTMENT RISKS/MITIGANTS
Risk: Continued market volatility and market declines in
North America currently a strong market at 48% of revenues
Mitigant: Diversification outside the US
Risk: Commodities price volatility
Mitigant: Focus on retaining ability to pass through higher input
costs to the consumer
Risk: Strengthening US dollar
Mitigant: Hedging (although can be expensive)
| Page 24
Jack Ferraro, MBA
70
presented by
APPENDIX
Tiffany & Co.
| Page 25
Jack Ferraro, MBA
70
presented by
MANAGEMENT TEAM
Name/Position
Background
Mr. Michael J. Kowalski has been the Chairman and Chief Executive Officer of Tiffany & Co.
since January 2003 and February 1999 respectively. Mr. Kowalski served as the President of
Tiffany & Co. from January 1996 to January 2003, Executive Vice President from March 1992
to January 1996 and Chief Operating Officer from January 1997 to February 1999. He has
been a Director of Tiffany since January 1995 and The Bank of New York Mellon Corporation
since July 1, 2007. He serves as a Director of Jewelers of America and PSB Group Inc.
Mr. Frederic Cumenal has been President of Tiffany & Co., since September 24, 2013 and is
responsible for the businesses in Asia, Japan, Europe and Emerging Markets at Tiffany & Co.
Mr. Cumenal served as Executive Vice President of Tiffany & Co. from March 10, 2011 to
September 24, 2013. He served as Chief Executive Officer & President of Champagne Moet &
Chandon SA. He has been Director of Tiffany & Co., since September 24, 2013.
Frederic Cumenal President
Ms. Caroline D. Naggiar serves as Senior Vice President of Tiffany & Co. and has been its
Chief Marketing Officer since 2007. Ms. Naggiar was assigned additional responsibility for the
Public Relations department in 2007 and served as Senior Vice President of Marketing of
Tiffany & Co. since February 1998. She joined Tiffany & Co. as Vice President of Marketing
Communications in June 1997.
| Page 26
presented by
HISTORICAL MULTIPLES
Tiffanys slightly expensive based on its historical
TEV/LTM EBITDA multiple
Currently 12.4x vs average of 10.6x
| Page 27
Jack Ferraro, MBA
70
presented by
Bargaining Power of
Suppliers: High
Products use
commodity inputs
Consumers concerned
about conflict diamonds
More expensive to acquire
conflict free diamonds
| Page 28
Jack Ferraro, MBA
70
presented by
12m ended
1/31/2009
FY 2009
$1,586.6
Asia-Pacific
363.1
Japan
533.5
Europe
273.1
Other
Total Revenue
Revenue Growth
92.6
$2,848.9
12m ended
1/31/2010
FY 2010
$1,410.8
(11.1%)
426.3
17.4%
513.0
(3.8%)
306.3
12.2%
53.3
(42.5%)
$2,709.7
(4.9%)
12m ended
1/31/2011
FY 2011
$1,574.6
11.6%
549.2
28.8%
546.5
6.5%
360.8
17.8%
54.2
1.7%
$3,085.3
13.9%
12m ended
1/31/2012
FY 2012
$1,805.8
14.7%
748.2
36.2%
616.5
12.8%
421.1
16.7%
51.3
(5.3%)
$3,642.9
18.1%
12m ended
1/31/2013
FY 2013
$1,840.0
1.9%
810.4
8.3%
639.2
3.7%
432.2
2.6%
72.5
41.4%
$3,794.2
4.2%
12m ended
1/31/2014
FY 2014
$1,926.9
4.7%
944.7
16.6%
578.6
(9.5%)
469.8
8.7%
111.2
53.4%
$4,031.1
6.2%
12m ended
7/31/2014
LTM
$4,214.8
4.6%
2015e
$2,023.21
5.0%
1,228.1
30.0%
590.1
2.0%
516.8
10.0%
122.4
10.0%
$4,480.5
11.1%
2016e
$2,124.37
5.0%
1,535.1
25.0%
601.9
2.0%
568.4
10.0%
134.6
10.0%
$4,964.4
10.8%
2017e
$2,230.59
5.0%
1,842.1
20.0%
614.0
2.0%
625.3
10.0%
148.1
10.0%
$5,460.0
10.0%
1,202.4
$1,646.4
57.8%
1,179.5
$1,530.2
56.5%
1,263.0
$1,822.3
59.1%
1,491.6
$2,151.4
59.1%
1,631.0
$2,163.3
57.0%
1,690.7
$2,340.4
58.1%
1,725.0
$2,489.8
59.1%
1,792.2
$2,688.3
60.0%
1,936.1
$3,028.3
61.0%
2,074.8
$3,385.2
62.0%
$1,018.1
135.8
$950.8
139.4
$1,063.0
147.9
$1,254.3
145.9
$1,302.4
163.6
$1,365.9
180.6
$1,413.4
191.5
$1,498.3
203.0
$1,588.2
215.2
$1,683.4
228.1
$1,153.9
40.5%
$1,090.2
40.2%
(5.5%)
$1,210.9
39.2%
11.1%
$1,400.2
38.4%
15.6%
$1,466.1
38.6%
4.7%
$1,546.5
38.4%
5.5%
$1,605.0
38.1%
3.8%
$1,701.3
38.0%
6.0%
$1,803.3
36.3%
6.0%
$1,911.5
35.0%
6.0%
$492.5
17.3%
$440.1
16.2%
$611.4
19.8%
$751.1
20.6%
$697.2
18.4%
$793.9
19.7%
$884.8
21.0%
$987.1
22.0%
$1,225.0
24.7%
$1,473.7
27.0%
($29.0)
0.1
(97.8)
$365.8
($55.0)
4.6
0.4
$390.0
($54.3)
7.0
(16.6)
$547.5
($48.6)
5.1
(42.7)
$664.9
($59.1)
5.5
0
$643.6
($62.7)
5.7
(482.1)
$254.8
($67.7)
5.7
(472.7)
$350.1
($68.0)
0
0
$919.1
($68.0)
0
0
$1,157.0
($68.0)
0
0
$1,405.7
133.6
36.5%
$232.16
8.1%
124.3
31.9%
$265.75
9.8%
179.0
32.7%
$368.46
11.9%
225.8
34.0%
$439.14
12.1%
227.4
35.3%
$416.17
11.0%
73.5
28.8%
$181.31
4.5%
109.4
31.2%
$240.73
5.7%
321.7
35.0%
$597.39
13.3%
404.9
35.0%
$752.03
15.1%
492.0
35.0%
$913.69
16.7%
124.7
124.3
-0.3%
$2.14
126.6
1.8%
$2.91
36.2%
127.4
0.6%
$3.45
18.4%
126.7
-0.5%
$3.28
-4.7%
127.8
0.9%
$1.42
-56.8%
128.6
0.6%
$1.87
32.0%
128.6
0.0%
$4.65
227.5%
128.6
0.0%
$5.85
25.9%
128.6
0.0%
$7.11
21.5%
$4.34
7.0%
$4.95
18.1%
$5.69
24.9%
| Page 29
presented by
$2,849
628
(136)
$492
$2,710
579
(139)
$440
$3,085
759
(148)
$611
$3,643
897
(146)
$751
$3,794
861
(164)
$697
$4,031
975
(181)
$794
2015e
2016e
2017e
$4,481
1,190
(203)
$987
$4,964
1,440
(215)
$1,225
$5,460
1,702
(228)
$1,474
Operating Margin
17.3%
16.2%
19.8%
20.6%
18.4%
19.7%
22.0%
24.7%
27.0%
Less: Taxes
Tax-effected EBIT
$134
$359
$124
$316
$179
$432
$226
$525
$227
$470
$73
$720
$345
$642
$429
$796
$516
$958
$136
154
$139
75
(276)
$656
$2.14
$148
127
269
$184
$2.91
$146
239
439
($7)
$3.45
$164
220
251
$163
$3.28
$181
222
184
$496
$1.42
$203
242
100
$502
$4.65
$215
265
100
$646
$5.85
$228
290
100
$796
$7.11
$340
8.0%
$1,651
8.0%
$1,651
3.5%
$18,234
$15,258
Terminal multiple
Terminal value
Present value of the terminal value
10.7x
$18,234
15,258
10.7x
Enterprise value
Plus: Net cash*
Equity value
$16,909
($658)
$16,251
3.5%
Enterprise value
Plus: Net cash
Equity value
$16,909
($658)
$16,251
Diluted shares:
128.6
Diluted shares:
128.6
$126.37
$126.37
$98.00
Price Target
Implied upside
$126.40
29.0%
| Page 30