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Bull of the Day: Signet Jewelers (SIG)

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Signet Jewelers (SIG - Free Report) is a leading retailer of diamond jewelry and watches, and operates under the Zales, Kay Jewelers, Jared, and other banners. In the U.S., Signet operates more than 2,900 stores, but its brands are found in the U.K., Canada, Puerto Rico, Ireland, and the Channel Islands as well.

Blowout Holiday Sales

Coming soon after a rating downgrade and price target cut from Wells Fargo (WFC - Free Report) earlier this month, Signet posted strong holiday sales numbers.

For the nine weeks ended Jan. 4, 2020, total same-store sales grew 1.6% thanks to the 2% increase in same-store sales in North America. Notably, e-commerce sales jumped 13.5% compared to brick-and-mortar sales decline of 0.2%.

Signet’s management was confident enough in these numbers that they boosted its Q4 and fiscal 2020 guidance.

Fiscal 2020 same-store sales are expected to increase 0.1%, up from prior guidance of 1% to 1.7% decline. Total revenue for the year is forecasted at $6.1 billion compared to previous guidance range of $6.01 billion to $6.05 billion. And, new adjusted earnings per share guidance of $3.61 to $3.69 is up significantly from analysts’ consensus of $3.26 per share.

CEO Virginia Drosos said in a press release that "We delivered holiday same store sales growth ahead of our guidance as we continued to implement year two of our Path to Brilliance transformation. Product newness, investments in our digital capabilities, and more targeted marketing campaigns drove both e-commerce and brick and mortar growth in North America.”

SIG is on the Rise

Signet Jewelers Limited Price and Consensus

 

Shares of SIG are up over 62% in the last six months, and the jewelry stock surged over 40% last week alone after it released its holiday sales numbers. Comparatively, the S&P 500 has returned about 11.3%. Earnings estimates have been rising too, and Signet is a Zacks Rank #1 (Strong Buy) pick right now.

For the current fiscal year, two analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 30 cents from $3.09 to $3.41. 2020 looks pretty strong too, with earnings and revenue expected to continue positive year-over-year growth.

SIG currently trades around 8.8X its forward full-year earnings estimates, slightly above the broader Retail-Jewelry industry (17X).

Last year, Signet battled numerous obstacles, from tariffs to tough year-over-year comparisons. But, its “Path to Brilliance” transformation initiative is successfully settling in, and thanks to these great 2019 holiday results, the jewelry retailer looks to continue capitalizing on its digital and product strengths. If you’re an investor searching for a broader retail stock to add to your portfolio, make sure to keep SIG on your shortlist.

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