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On Thursday, shares of Signet Jewelers Ltd. (SIG - Free Report) have been rallying all day, and closed the day up over 16% in afternoon trading after the company, which owns jewelry brands like Kay, Zales, and Jared, reported strong second-quarter earnings and a new digital acquisition.

Signet reported earnings of $1.33 per share, soaring past the Zacks Consensus Estimate of $1.10 per share. Revenues came in at $1.4 billion, also beating our consensus estimate and growing almost 2% year-over-year. Same-store sales improved as well, increasing 1.4% during the quarter, while e-commerce sales rose 18.1% year-over-year. For an in-depth look at Signet’s earnings report, read: Signet Glitters on Q2 Earnings.

Most notably, the company announced that it has scooped up R2Net for $328 million in an all-cash deal. Founded in 2007, R2Net has transformed over the years into a digital diamond supply chain platform, with technology that includes “proprietary 360° Diamond Display Technology, Virtual Ring Sizer and Ring Try-On mobile application,” according to Signet.

R2Net’s current leadership team will remain in place, while co-founder Oded Edelman will become Signet’s chief digital innovation advisor. The company’s brands will be an independent division under Signet.

One of R2Net’s biggest brands is online, millennial friendly jewelry retailer JamesAllen.com, and will likely become a huge asset for Signet going forward. Like many brick-and-mortar retailers, Signet has become increasingly focused on building its e-commerce presence as customers change the way they shop, especially for things like jewelry.

In particular, JamesAllen.com will “add a leading, fast-growing online jeweler to our portfolio. The acquisition will enhance our innovation and digital capabilities with R2Net’s technology to create a best-in-class OmniChannel shopping experience across our banners,” said Virginia C. Drosos, Signet’s new CEO.

This deal reminds me, at least, of Walmart’s (WMT - Free Report) $3.3 billion acquisition of Jet.com last year. With Jet, Walmart gained not only an e-commerce platform, but the retailer got Marc Lore, who is now the company’s president and CEO of Walmart eCommerce U.S. And under Lore, Walmart has bought Moosejaw, Modcloth, Bonobos, and Shoebuy, and is now collaborating with Alphabet’s (GOOGL - Free Report) Google to make shopping easier with the tech company’s voice assistant.

Signet, too, is getting both a company with a strong digital and technological presence, in addition to an executive that is moving into a role overseeing a key area of growth.

Signet In-Depth

Signet is currently a #3 (Hold) on the Zacks Rank, with a VGM Score of ‘B.’ Year-to-date, the jewelry company has lost over 45% in value, while the S&P 500 has gained more than 8% during that same time frame. Its industry, Retail-Jewelry, sits in the top 41% of all 265 industries ranked on the Zacks Industry Rank.

With a P/E of 7.77, Signet is very cheap compared to its overall industry, and especially compared to its market peers. Especially over the last 12 months, you’ll see how Signet’s valuation, while spiking late last year, has hovered below that double digit mark, and the stock has traded at a discount to the Retail-Jewelry industry since late 2016.

Last year’s poor-performing holiday season, combined with lasting bad publicity from ongoing company scandals, have led to increased investor skepticism. Similar to apparel retailers, part of Signet’s valuation relies heavily on consumer perception. The stock trades cheap because of many factors, but its brands don’t resonate like they used to, and they certainly don’t have the same impact on consumers like jewelry competitors Movado (MOV - Free Report) and Tiffany (TIF - Free Report) do.

Looking ahead, SIG still has some major growing pains to get through. Zacks expects the company to report an earnings loss of over 10% for the current year, with sales also declining about 3.5%. But if this latest earnings report is any indication, Signet is improving, and with its new digital initiative, the company has the opportunity to start changing both shoppers’ and Wall Street’s viewpoints.

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