What happened

"Blue box" jeweler Tiffany & Co. (TIF) reported its fiscal Q3 2018 earnings results this morning, and the news was not good. Although Tiffany met analyst consensus targets for per-share earnings of $0.77 in the quarter, it fell just short of targeted revenue of $1.05 billion (reporting $1.01 billion).

Worst of all, though, was Tiffany's guidance: Management says it will still probably earn only between $4.65 and $4.80 per share by the end of this year.

A big, shiny diamon

Investors are finding Tiffany stock somewhat less than sparkly today. Image source: Getty Images.

So what

That's in line with past guidance from the company. Problem is, analysts are still looking for $4.83 per share -- and so it appears they're going to be disappointed.

Tiffany management is speculating that Q3's "tourist spend" by Chinese nationals shopping at Tiffany stores "outside of China" is the reason for the quarter's sales miss, while at the same time insisting "the reality is that the Tiffany brand is appealing to Chinese customers as evidenced by the continued strong sales growth in mainland China in the quarter." (Of course, that doesn't really explain why sales were down, if all that happened was a shift in where the Chinese were doing their shopping, and not a decline in shopping overall.)

Management says it's playing to what it sees as this trend regardless, and "increasing our inventory in China because demand there has grown." Of course, if that's true, it doesn't explain why Tiffany's earnings guidance wound up below consensus.

Now what

With Tiffany's explanations for what went wrong -- and what might keep going wrong -- not making 100% sense right now, investors are rightly nervous about owning the shares.

Tiffany stock currently sells for about 29 times earnings, which is more than most stocks on the S&P 500 cost. With analysts forecasting less than 12% long-term earnings growth for Tiffany, that was probably already too rich a valuation. Now, Tiffany has told investors that analyst estimates are probably optimistic.

Is it any wonder investors are responding by selling Tiffany stock?