It has been about a month since the last earnings report for Signet (SIG - Free Report) . Shares have lost about 7.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Signet due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Signet’s Q3 Earnings Surpass Estimates, Sales Rise Y/Y
Signet posted better-than-expected results for third-quarter fiscal 2023. Further, sales increased year over year while earnings declined from the year-ago fiscal quarter’s reading. Also, same-store sales dropped 7.6% from the year-earlier fiscal quarter’s reading.
Quarterly Details
Signet reported adjusted earnings of 74 cents per share, beating the Zacks Consensus Estimate of 30 cents. The bottom line plunged from $1.43 earned in the year-ago fiscal quarter.
This jewelry retailer generated total sales of $1,582.7 million, ahead of the Zacks Consensus Estimate of $1,473 million. The top line rose 2.9% from the prior-year fiscal quarter’s tally.
A Sneak Peek Into Margins
The adjusted gross profit in the fiscal third quarter amounted to $557.6 million, down 3.1% from $575.6 million in the year-ago fiscal comparable quarter.
Adjusted SG&A expenses came in at $497.2 million, up 5.4% from $470.5 million in the prior fiscal year’s comparable quarter. SIG reported an adjusted operating income of $57.9 million, down from the $105.2 million recorded in the year-ago fiscal quarter. As a rate of sales, the adjusted operating margin contracted 310 basis points to 3.7%.
Segment Discussion
Sales in the North American segment rose 5.1% from the year-ago fiscal quarter’s number to $1.5 billion. Same-store sales fell 7.6% from the year-ago fiscal quarter’s levels due to lower transactions, partly compensated by a rise in the average transaction value (ATV).
Sales in the International segment dropped 21.2% from the year-earlier fiscal quarter’s reading to $95.3 million. Same-store sales in the segment slipped 6.7% from the year-ago fiscal quarter’s tally, reflecting the impacts of increased ATVs and lower transactions.
Financial Details
Signet ended the fiscal third quarter with cash and cash equivalents of $327.3 million, accounts receivable of $29.8 million and inventories of $2,429 million. The long-term debt was $147.3 million at the end of the reported fiscal quarter. Total shareholders’ equity was $1,358.1 million at the end of the fiscal third quarter.
As of third-quarter fiscal 2023, Signet used net cash of $155.5 million from operating activities. SIG had an adjusted free cash flow of a negative $249.8 million as of Oct 29, 2022.
Signet completed a shares buyback of $20.2 million in the fiscal third quarter. Fiscal 2023 year to date through Dec 2, it has repurchased roughly 5.6 million shares for $393 million. SIG has buybacks of about $570.3 million left under its authorization. Signet’s board declared a quarterly cash dividend of 20 cents per share for the fourth quarter of fiscal 2023.
Guidance
Signet updated guidance for fiscal 2023. It projects total revenues in the band of $7.77-$7.84 billion, compared with $7.60-$7.70 billion projected earlier and $7.83 billion delivered in fiscal 2022. The adjusted operating income is still anticipated in the range of $809-$850 million, versus the earlier projection of $787-$828 million and $908.1 million recorded in the last fiscal year.
Adjusted earnings per share (EPS) are envisioned in the bracket of $11.40-$12.00 compared with the previous forecast of $10.98-$11.57 for fiscal 2023 and $12.28 earned in fiscal 2022.
Capital expenditures for fiscal 2023 are likely to be nearly $215 million.
For the fourth quarter of fiscal 2023, management expects revenues in the range of $2.59-$2.66 billion. The adjusted operating income is expected in the range of $363-$404 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Signet has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. It comes with little surprise Signet has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s an American AI company that’s riding low right now, but it has rounded up clients like BMW, GE, Dell Computer, and Bosch. It has prospects for not just doubling but quadrupling in the year to come. Of course, all our picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock And 4 Runners Up
It has been about a month since the last earnings report for Signet (SIG - Free Report) . Shares have lost about 7.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Signet due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Signet’s Q3 Earnings Surpass Estimates, Sales Rise Y/Y
Signet posted better-than-expected results for third-quarter fiscal 2023. Further, sales increased year over year while earnings declined from the year-ago fiscal quarter’s reading. Also, same-store sales dropped 7.6% from the year-earlier fiscal quarter’s reading.
Quarterly Details
Signet reported adjusted earnings of 74 cents per share, beating the Zacks Consensus Estimate of 30 cents. The bottom line plunged from $1.43 earned in the year-ago fiscal quarter.
This jewelry retailer generated total sales of $1,582.7 million, ahead of the Zacks Consensus Estimate of $1,473 million. The top line rose 2.9% from the prior-year fiscal quarter’s tally.
A Sneak Peek Into Margins
The adjusted gross profit in the fiscal third quarter amounted to $557.6 million, down 3.1% from $575.6 million in the year-ago fiscal comparable quarter.
Adjusted SG&A expenses came in at $497.2 million, up 5.4% from $470.5 million in the prior fiscal year’s comparable quarter. SIG reported an adjusted operating income of $57.9 million, down from the $105.2 million recorded in the year-ago fiscal quarter. As a rate of sales, the adjusted operating margin contracted 310 basis points to 3.7%.
Segment Discussion
Sales in the North American segment rose 5.1% from the year-ago fiscal quarter’s number to $1.5 billion. Same-store sales fell 7.6% from the year-ago fiscal quarter’s levels due to lower transactions, partly compensated by a rise in the average transaction value (ATV).
Sales in the International segment dropped 21.2% from the year-earlier fiscal quarter’s reading to $95.3 million. Same-store sales in the segment slipped 6.7% from the year-ago fiscal quarter’s tally, reflecting the impacts of increased ATVs and lower transactions.
Financial Details
Signet ended the fiscal third quarter with cash and cash equivalents of $327.3 million, accounts receivable of $29.8 million and inventories of $2,429 million. The long-term debt was $147.3 million at the end of the reported fiscal quarter. Total shareholders’ equity was $1,358.1 million at the end of the fiscal third quarter.
As of third-quarter fiscal 2023, Signet used net cash of $155.5 million from operating activities. SIG had an adjusted free cash flow of a negative $249.8 million as of Oct 29, 2022.
Signet completed a shares buyback of $20.2 million in the fiscal third quarter. Fiscal 2023 year to date through Dec 2, it has repurchased roughly 5.6 million shares for $393 million. SIG has buybacks of about $570.3 million left under its authorization. Signet’s board declared a quarterly cash dividend of 20 cents per share for the fourth quarter of fiscal 2023.
Guidance
Signet updated guidance for fiscal 2023. It projects total revenues in the band of $7.77-$7.84 billion, compared with $7.60-$7.70 billion projected earlier and $7.83 billion delivered in fiscal 2022. The adjusted operating income is still anticipated in the range of $809-$850 million, versus the earlier projection of $787-$828 million and $908.1 million recorded in the last fiscal year.
Adjusted earnings per share (EPS) are envisioned in the bracket of $11.40-$12.00 compared with the previous forecast of $10.98-$11.57 for fiscal 2023 and $12.28 earned in fiscal 2022.
Capital expenditures for fiscal 2023 are likely to be nearly $215 million.
For the fourth quarter of fiscal 2023, management expects revenues in the range of $2.59-$2.66 billion. The adjusted operating income is expected in the range of $363-$404 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Signet has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. It comes with little surprise Signet has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s an American AI company that’s riding low right now, but it has rounded up clients like BMW, GE, Dell Computer, and Bosch. It has prospects for not just doubling but quadrupling in the year to come. Of course, all our picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock And 4 Runners Up
Get the latest research report on SIG - FREE