Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of specialty retailer Tiffany & Co (NYSE:TIF) surged on Wednesday after the company beat analyst expectations when it reported its first-quarter earnings. At noon, the stock was up about 11.5%.

So what: Tiffany reported quarterly revenue of $962 million, down 5% year-over-year but well ahead of the average analyst estimate, which called for revenue closer to $920 million. Exchange rate issues were responsible for the decline, with sales rising by 1% on a constant-exchange-rate basis.

Comparable-store sales grew in most regions on a constant-exchange-rate basis, with the Americas posting 3% growth, the Asia-Pacific region posting 2% growth, and Europe posting 17% growth. Japan was a weak spot, with comparable-store sales falling by 24%, partially due to a difficult comparison to the same quarter last year, when comparable-store sales surged by 30% prior to an increase in Japan's consumption tax.

Tiffany reported net income of $0.81 per share, down from $0.97 per share during the same period last year but $0.11 ahead of analyst expectations. Lower sales due to exchange rate issues, as well as higher marketing spending, were the drivers behind the decline. Tiffany expects earnings to grow minimally during fiscal 2015, which would put EPS somewhere around the $4.20 reported during 2014, excluding one-time charges.

Now what: Expectations were incredibly low going into Tiffany's earnings report, and it's no surprise that the market jubilantly sent shares higher. Backing out exchange rate issues and the volatility of sales in Japan, Tiffany had a decent quarter. Operating expenses did rise 5% during the quarter, and the strong U.S. dollar effectively halved this rate of growth, meaning that operating expenses would have grown by about 10% excluding currency effects. Either way, operating expense growth outpaced revenue growth by about ten percentage points, with the silver lining being that analysts were expecting the situation to be far worse.

Tiffany trades at around 22 times last year's adjusted earnings, so it's certainly not a cheap stock. Analysts are expecting earnings growth to pick up significantly next year after remaining essentially flat this year, and Tiffany will need to execute in order to justify its valuation. For now, though, beating extremely low expectations was enough to send the stock soaring.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.