Foolish Forecast: Tiffany's Hot Ice

Jewelry store icon Tiffany (NYSE: TIF) is set to release second-quarter results tomorrow morning. Below is the vital data to help Fools determine if earnings will continue to sparkle.

What analysts say:

• Buy, sell, or waffle? Seventeen analysts currently follow Tiffany. Seven are bullish on the stock, nine are on the fence, and one abstained from giving a formal opinion. The Motley Fool CAPS community takes a bullish stance, offering the company a four-star rating (out of five).
• Revenue. Analysts are projecting $643.4 million in second-quarter sales, or just about 12% more than last year's second-quarter sales amount.
• Earnings. Analysts expect quarterly earnings of $0.34, or around 17% more than the $0.29 reported last year.

What management says:
Back when Tiffany released first-quarter results, management said it expected full-year sales growth of 12% and diluted earnings of $2.10-$2.15. It also announced plans for "significant expansion of its wholesale distribution of TIFFANY & CO. watches in 2008 in major U.S. and international markets" as it moves to increase watch revenue as a percent of total sales mix.

What management does:
Tiffany has averaged double-digit sales increases over the past five years, and while earnings growth over this time frame has fallen just short of double digits, profitability has held up well. Net margins close to 10% far exceed those posted by Zale (NYSE: ZLC) (1.2%) and online rival Blue Nile (Nasdaq: NILE) (5.1%) over the last 12 months.

Margins	01/06	04/06	07/06	10/06	01/07	04/07
Gross	56.0%	56.5%	56.4%	56.2%	55.7%	55.4%
Operating	16.0%	16.1%	15.7%	15.6%	15.9%	15.7%
Net*	9.6%	9.7%	9.4%	9.3%	9.5%	9.4%

*Net margins are normalized. All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Tiffany is a diamond in the rough in the realm of publicly traded jewelry stores. It is also one of the more appealing retailers out there, as it carries high brand recognition in an industry where it's hard to tell what makes one diamond better than the next. Tiffany is also well known for its silver products, and a push into upscale watches could steal thunder from Movado (NYSE: MOV) and Rolex.      

Unfortunately for prospective investors, Tiffany's high-priced mindset has carried over to its share price, and it trades at a rich 19 times forward earnings. Recent market malaise has pushed the share price down slightly, but the company is far from losing its luster.              

Tiffany's lustrous past:

• The company glittered last holiday season ...
• ... and sparkled throughout 2006.

Blue Nile is both a Motley Fool Rule Breakers and a Motley Fool Hidden Gems recommendation. You can take a free 30-day trial of either newsletter.

Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.