Signet Jewelers Upped to Hold

Signet Jewelers Ltd. (SIG - Analyst Report) is the world’s largest specialty retail jeweler and operates leading operations in both the US and UK. The company’s position in the specialty jewelry retail business should enable it to deliver solid growth over the long term.

However, the stock is down over 50% in the last twelve months and is discounting continued weakness in the jewelry retail business. The challenging economic conditions will continue to pressure its sales and profits in the near term.

With its earnings estimates continuing to decline at a rapid pace, the stock will most likely be range bound for several months. As such, we rate the stock a Hold with a six-month target price of $9.25, or about 6.5x our fiscal 2009 EPS estimate.

This valuation looks downright cheap and is well below its industry peers. But we would wait until there are signs that macro headwinds are beginning to stabilize before getting long the stock.

Read the full analyst report on SIG