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Bear of the Day: Signet Jewelers (SIG)

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Today’s Bear of the Day is unique as it is a retail name but because it’s in the jewelry business it faces different risks. I’m talking about Signet Jewelers (SIG - Free Report) . Signet Jewelers Limited engages in the retail sale of diamond jewelry, watches, and other products in the United States, Canada, Puerto Rico, the United Kingdom, the Republic of Ireland, and the Channel Islands. Its Sterling Jewelers division operates stores in malls and off-mall locations primarily under the Kay Jewelers, Kay Jewelers Outlet, Jared The Galleria of Jewelry, Jared Vault, and various mall-based regional brands. 

The bearish attitude in this stock isn’t centered on this upcoming quarter or even this year. It’s all about next year’s estimates. Our Zacks Consensus Estimate has come down from $6.52 to $6.18 for next year despite this year’s number looking strong. Estimates for this year have gone from $6.26 to $6.49. So while this upcoming earnings report may be solid, it’s the contraction next year down to $6.18 that should have investors worried.

The bearish news has put the stock under pressure. It’s traded south of its 50-day moving average since diving below it after the November earnings report. After making new lows under $48 in early February the stock has poked its head above $50. The 50-day is still providing upside resistance overhead at $53.36. A decent earnings report could break this stock out of its funk, but only if next year’s numbers start to improve.

Right now there’s not a single stock in this industry that’s ranked better than a Zacks Rank #3 (Hold). The retail jewelry industry ranks in the Bottom 7% of our Zacks Industry Rank. Both Movado Group (MOV - Free Report) and Tiffany (TIF - Free Report) are Zacks Rank #3 (Hold) stocks.

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