Tiffany's Smashed Forecasts While Zale and Signet Report

This has been a rather wild week for jewelry companies! On Tuesday, Tiffany & Company (NYSE: TIF  ) , Signet Jewelers Limited (NYSE: SIG  ) , and Zale Corporation (UNKNOWN: ZLC.DL  ) all reported earnings that either matched or exceeded analyst expectations. In response to these results, shares of each company increased by more than the market. A big question still remains; are these companies still worth buying or has all the easy money been made? In the hope of finding an answer, I dug a bit more into each company's quarterly results.

Tiffany smashed forecasts
For the quarter, Tiffany's results were the best, bar none. Revenue came in at $911.48 million, up 6.9% from the $852.74 million the company reported during the same quarter a year ago. If this wasn't enough, the company beat the analyst expectation of $889.51 million by 2.5%.

Although Tiffany opened six new stores, the primary driver of revenue growth was a 3% increase in comparable-store sales (after foreign currency adjustments). Though sales rose in every region with the exception of Japan, its Asia-Pacific operations significantly outpaced the rest. Sales there rose by 27%, primarily driven by a 20% increase in comparable-store sales.

On top of attractive revenue growth, the company saw its net income rise by 49.7% from $63.2 million to $94.6 million. While increased revenue had a role to play in this bottom-line growth, so too did management's ability to lower its cost of goods sold from 45.6% to 43%. In spite of slightly more shares outstanding, earnings per share still rose 49% from $0.49 to $0.73, beating the analyst estimate of $0.58.

Signet matched on higher revenue
Unfortunately, not every company can pull off a tremendous earnings beat like Tiffany, but this doesn't mean that results can't be impressive. For the quarter, Signet reported revenue of $771.4 million, 7.7% higher than the $716.2 million the company reported for the same quarter a year ago. Like Tiffany, Signet also managed to exceed the analyst expectation for the quarter with revenue beating by 0.1%.

Although Signet opened 20 new locations since February of this year, comparable-store sales provided the primary growth driver. For the quarter, management reported that comparable-store sales rose an impressive 3.2%. This strong performance was primarily attributable to a 5.8% rise at Kay locations, while Jared followed with comparable-store sales growth of 3%. These were offset by a 2.2% decline in regional names.

Net income for the quarter fell by 3.7% from $34.9 million to $33.6 million. The decline came about as the company's cost of goods sold rose from 67.1% of sales to 69%. Despite margin deterioration, the company reported earnings per share of $0.42, matching Mr. Market's expectations.

Zale has a poor but not quite dismal quarter
For the quarter, Zale had the worst financial performance. While Tiffany smashed forecasts and Signet came in roughly in-line with Mr. Market's expectations, Zale technically beat forecasts but its performance was still far from good. Revenue rose by 1.4% from $357.5 million to $362.6 million, narrowly beating the analyst estimate.

The increase in revenue came about as comparable-store sales rose by 4.4%. This rise was led by a 7.5% increase in the company's Zale branded stores, and an 8.4% increase in its Peoples branded locations.

Net income for the quarter came in at -$27.31 million, a slight improvement from the -$28.27 million Zale reported for the same quarter last year. Even though sales grew, the company's hefty cost of goods sold and selling, general and administrative expenses, making up 46.6% and 57.4% of sales, respectively, forced a net loss. However, Zale's loss per share of $0.83 represented an improvement over its loss of $0.88 per share last year and the loss of $0.86 per share that analysts expected.

Foolish takeaway
Beyond a doubt, Tiffany smashed not only its own forecasts, but also those of its peers this past quarter. Based on this criterion alone, it appears as though the company presents investors with an attractive target. The only downside to buying shares of the jewelry chain now is that, at 26 times earnings, they are fairly expensive. For this reason alone, the Foolish investor might want to sit by the sidelines and wait for shares to decline to more attractive levels. That, or buy into one of its peers.

Signet's metrics look reasonable and the stock trades at a more modest 17 times earnings. However, if Zale can turn itself around, as it looks to be doing judging by its comparable-store sales growth, then it may face the biggest upside, though it also carries some hefty downside should things go south.

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