Psst! Hey, buddy! Wanna buy an earnings report? Sure, it's Tiffany (NYSE:TIF). Fell off the back of a truck just yesterday.

What's that? The real Tiffany is giving away free earnings news tomorrow? Well, fine, then. Go ahead and get the real thing, if that's your bag. Heck, I'll even give you a few numbers to help figure out whether the company's shares are worth what Mr. Market's charging.

Wall Street Wisdom:

  • General consensus. Of the 15 analysts following Tiffany, four rate the stock a buy, one gives it a sell, and everyone else calls it a hold.
  • Revenues. Tomorrow's report will cover the company's Q4 and full-year 2005 results. Analysts expect to see 7% sales growth versus fiscal Q4 2005, to $868.2 billion.
  • Earnings. Profits are expected to rise 6% to $0.84 per share.

Margin watch:
Tiffany's rolling gross and operating margins have both fallen considerably over the past 18 months. In sharp contrast, its rolling net margin has exploded upwards, with the company now netting 42% more pennies out of each dollar than it was doing a year and a half ago.

Margins %

7/04

10/04

1/05

4/05

7/05

10/05

Gross

57.1

56.6

55.8

55.2

55.2

55.4

Op.

16.7

15.7

14.2

14

14.4

14.4

Net

9.9

9.3

13.8

13.6

14.1

14.1
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish forensics:
Unfortunately for Tiffany shareholders, this extra profits burst is about to end. It reflects the company's very profitable sale of its interest in Aber Diamond (NASDAQ:ABER) in Q4 2004, which inflated net results in that quarter, and rolling net results and the three succeeding quarters. Tomorrow, we'll probably see Tiffany's net profitability fall back toward the high single to low double digits.

Foolish lookout:
Tiffany has already reported its results for the crucial holiday season. Just like less marquee-name retailers, Tiffany depends on Christmas to boost its sales numbers and rakes in, on average, 70% to 80% more sales in Q4 than in any other given quarter. For that reason, the reported 6% rise in sales for November/December has to be considered a disappointment -- though a small one. Sales would have risen 9% but for currency exchange rate fluctuations.

In other news, Tiffany has closed down its "poison pill" anti-takeover plan -- a way to flood the market with shares to dilute a would-be acquirer's stake. In the long term, that's a plus for shareholders for two reasons: First, it makes it easier for acquirers to pay shareholders a premium should they decide to buy the company. Second, it demonstrates management's willingness to put their jobs on the line in the shareholders' best interests -- although this is tempered somewhat by the management's decision to reserve the right to adopt a poison pill without a stockholder vote under "exigent circumstances."

Competitors:
There aren't many companies in Tiffany's class. But to an extent, the company does compete for sales with brands such as Zale (NYSE:ZLC), Signet (NYSE:SIG), and up-and-comer Blue Nile (NASDAQ:NILE).

Blue Nileis a recommendation of both theMotley Fool Rule BreakersandMotley Fool Hidden Gemsnewsletters. Take your favorite newsletter for a free, 30-day trial run.

Fool contributorRich Smithhas no interest, short or long, in any company named above.