Tiffany (NYSE:TIF), the worldwide manufacturer and retailer of luxury goods, has had a strong run in 2014 and investors hope it can keep the rally going after its upcoming earnings report. Tiffany has scheduled the release of its fourth-quarter results for March 21, so let's take a look at its most recent earnings and the expectations for the upcoming report to determine if we should buy right now or if we should wait to see what the company has to say.

Screen Shot

Source: Tiffany & Co.

The last time out
On Nov. 26, Tiffany released its third-quarter report and blew away analysts' expectations. Here's a breakdown and a year-over-year comparison:

Metric Reported Expected
Earnings Per Share $0.73 $0.58
Revenue $911.50 million $889.38 million

Source: Benzinga

Images

Source: Tiffany & Co.

Tiffany's earnings per share increased 49% and revenue increased 6.9%, driven by comparable-store sales growth of 6.9%. Gross profit rose 11.9% to $519.48 million and the gross margin expanded an impressive 260 basis points to 57%.

Tiffany also raised its outlook for the full year to call for earnings per share of $3.65-$3.75, versus previous expectations of $3.50-$3.60; the new outlook calls for earnings growth of 12.3%-15.4% from fiscal 2012. Overall, it was a great quarter for Tiffany and the stock reacted by rising 8.68% in the trading session that followed.


Expectations & what to watch for
Tiffany's fourth-quarter results are due out before the market opens on March 21 and the current expectations call for growth on both the top and bottom lines; here's an overview:

Metric Expected Year Ago
Earnings Per Share $1.52 $1.40
Revenue $1.31 billion $1.24 billion

Source: Earnings Whisper

Images

Source: Tiffany & Co.

These estimates call for earnings per share to increase 8.6% and revenue to rise 5.7% year-over-year, which seems well within reach for a brand of Tiffany's strength. Key metrics aside, it will also be important to watch for two other statistics and updates: the change in the gross margin and the company's outlook on fiscal 2014:

  1. This holiday season was highly promotional for retailers, so it will be important to watch for the change in Tiffany's gross margin. The company did not offer any huge promotions to note, so I think it will actually show margin expansion beyond the 59.1% reported in the year-ago quarter.
  2. The most important update to watch for will be Tiffany's outlook on fiscal 2014; the current consensus analyst estimates call for earnings per share of $4.28 on revenue of $4.3 billion. This will have the most influence on the stock's reaction following the release and I am confident that Tiffany's guided range will contain these expectations, following strong fiscal-2013 results.
After reviewing the expectations and the projected outlook for 2014, I believe Tiffany offers a great investment opportunity today. It may trade within a few points of its 52-week high, but the company has been firing on all cylinders and it could continue to rise to new all-time highs throughout the year.

A red-hot competitor
Michael Kors (NYSE:KORS), one of Tiffany's largest competitors in the luxury-goods industry, has already reported quarterly results which give investors a strong feel for the condition of the industry. The results were released on Feb. 4, so here's a breakdown of what the company accomplished:

Metric Reported Expected
Earnings per share $1.11 $0.86
Revenue $1.01 billion $859.94 million

Source: Benzinga

Screen Shot

Source: Michael Kors' Instagram

Michael Kors blew away analysts' expectations with earnings per share increasing 73.4% and revenue rising 59% year-over-year. Global comparable-store sales increased an incredible 27.8%, including 24% growth in North America. As several retailers have noted a highly promotional and competitive retail environment, Michael Kors topped $1 billion in quarterly revenue for the first time and its gross margin expanded 100 basis points to 61.2%.
 
Tiffany, like Michael Kors, has a very strong brand and it does not need to offer numerous promotions to drive customer traffic, especially during holiday quarters. In summary, I believe this is a positive indicator for Tiffany and think it is a compelling opportunity going into earnings.

The Foolish bottom line
Tiffany is one of the world's most popular luxury brands and it is scheduled to report fourth-quarter results soon. I believe the holiday season will have been one of the most successful in the company's history, allowing the company to surpass analysts' expectations and pushing the stock to a fresh 52-week high. Foolish investors should strongly consider initiating positions right now because the future seems bright for Tiffany and its healthy 1.45% dividend will provide additional returns along the way.

Joseph Solitro owns shares of Michael Kors Holdings. The Motley Fool recommends Michael Kors Holdings. The Motley Fool owns shares of Michael Kors Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.