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The first bullet point in a presentation that Tiffany NYSE: TIF just gave investors neatly sums up why the stock has slumped lately. The resulting pessimism on Wall Street has pushed shares to 17 times expected earnings to mark one of its lowest valuations in years. Let's look at whether that collapse is a chance to buy a strong jewelry brand on the cheap -- or a sign of yet more underperformance ahead for the stock. The first thing to understand is that much of Tiffany's recent struggles have to do with industrywide issues — and not market share losses or missteps by the executive team.

Economic challenges such as weakening currencies and lower oil prices pinched demand for jewelry sales both in the U. Those negative trends hurt all market participants, including online seller Blue Nile NASDAQ: NILE , which saw its sales growth decelerate in thanks to what management described as "weakness from high-ticket purchases and foreign currencies, as well as lower selling prices for core engagement products.

Tiffany Blue Box | The Tiffany Story | Tiffany & Co.

Tiffany's operations have been hurt in much the same way. On the plus side, the jeweler's high-end products performed well in this tough environment. And here's more evidence that its brand remains strong: TIF Gross Profit Margin TTM data by YCharts.

Meanwhile, even as management missed the sales forecast, it exceeded the company's cash flow goal. Industry issues are sure to keep intense pressure on operating results for the time being. Cumenal and his team now project as marking Tiffany's second straight year of lower profits. Still, the bright spots from last year are again showing up in these latest numbers.

Average selling prices are up, and gross profit is headed higher. On that strength, investors with a long time horizon should consider this stock for their watch lists.

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Sure, lots of patience will be required as shareholders wait for industry trends to improve. But Tiffany's brand is holding up well through the economic challenges, and its business should emerge from the downturn in a good position to return to its prior pace of near double-digit annual profit growth.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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