Signet Jewelers Ltd.

Signet Jewelers Ltd. (SIG - Snapshot Report) recently surprised on estimates for the fourth quarter in a row as it gains market share as competitors throw in the towel. The company has a forward P/E of 14.42.

Company Description

Signet Jewelers is a specialty jewelry retailer. The company operates 1,948 stores, including 1,394 stores in the U.S. under the names of Kay Jewelers, Jared The Galleria of Jewelry and others. In the UK, where it operates 554 stores, its brands included H.Samuel, Ernest Jones, and Leslie Davis.

Signet Surprised by 52.94% in the Fiscal Third Quarter 2010

On Nov 24, Signet reported results for its fiscal 2010 third quarter and beat the Zacks Consensus by 9 cents but still recorded a loss of 8 cents versus the consensus of a loss of 17 cents per share.

Sales declined by 2.5% to $613.7 million. Same store sales also fell by 1.9%. In the US, which accounts for 80% of sales, sales fell 1.7% and same store sales decreased 2.4%. This was better than the fiscal second quarter, where sales fell 5.5%. The Jared chain showed signs of a slowing sales decline.

In the UK, net sales rose 4.5% while same store sales fell 0.2%. Ernest Jones showed improved performance. The diamond category also showed improvement at both Ernest Jones and H.Samuel.

Third quarter results were better than the year ago period as the company continued tight control of costs and gross merchandise margin. It also doesn't hurt that several competitors have either gone out of business or have been significantly weakened by the recession.

Zacks Consensus Estimates Rise

Analysts are more optimistic heading into the company's most profitable quarter, which covers the holiday season. Fiscal fourth quarter estimates are up 4 cents in the last week to $1.11 per share.

The 2010 Zacks Consensus Estimate jumped 10 cents to $1.65 per share as 1 out of 2 covering analysts raised during that time period.

Value Fundamentals

Signet Jewelers is a Zacks #1 Rank (strong buy). It has a price-to-book ratio of 1.38. The company has a strong 5-year average return on equity (ROE) of 14.04%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

Read the full analyst report on SIG