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SIG Stock Trading Above 200 & 50-Day SMA: What's Next for Investors?
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Signet Jewelers Limited (SIG - Free Report) has demonstrated strong upward momentum, trading above its 200-day and 50-day simple moving averages (SMA). SMA is a key indicator of price stability and long-term bullish trends. SIG closed yesterday’s trading session at $103.14, ahead of its 200-day and 50-day SMA of $94.47 and $83.70, respectively. This technical strength, along with sustained momentum, reflects positive market sentiment and investor confidence in SIG's financial health and growth prospects.
Shares of the company have seen an impressive price surge over the past year, climbing 41.9% and surpassing the Zacks Retail-Jewelry industry’s 21.3% growth. This is owing to its enhanced operational efficiency and cost-saving strategies, which have also helped it to outperform the broader Retail-Wholesale sector and the S&P 500 index’s respective growth of 34.2% and 33.7% in the same period.
Image Source: Zacks Investment Research
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. This leading diamond jewelry retailer is inching toward its 52-week high of $112.06 attained on June 3, 2024, thus reflecting strong investor confidence and market optimism about its future.
Image Source: Zacks Investment Research
Signet Gains on Cost-Saving Initiatives & Digital Expansion
Signet is making substantial progress with its cost-saving initiatives, increasing its fiscal 2025 savings target from $150 million to $200 million. The company also raised its three-year cost-saving goal from $350 million to $450 million, reflecting confidence in its ability to streamline operations and improve profitability. These measures helped reduce SG&A expenses by 2.5% in the second quarter of fiscal 2025, allowing Signet to stay competitive while reinvesting in key growth areas such as new merchandise and digital expansion.
In the fiscal second quarter, Signet managed to expand both its merchandise margins and average transaction value (ATV) despite a tough promotional environment. Merchandise margin grew 120 basis points while ATV in North America increased 1.6%, driven by a focus on product offerings and brand positioning. The introduction of new categories, like lab-grown diamond fashion jewelry, which grew more than 25% year over year, played a significant role in driving this success.
Signet’s engagement sales, a critical revenue driver, are also recovering, with engagement unit sales improving approximately 400 basis points on a same-store sales basis in the second quarter. This recovery is backed by an increase in customer engagement and Signet expects further growth during the holiday season. The resurgence in the bridal segment is crucial for the company’s financial performance as engagement-related purchases are a key component of its overall sales.
The company’s services segment has shown consistent growth, with revenues rising 1.4% in the fiscal second quarter. High-margin services like extended service agreements in the lab-grown diamond category have driven this growth. Additionally, Signet's digital sales have improved significantly with new website features and better vendor communication systems, thereby positioning it for further success in the online market.
SIG Stock’s Attractive Valuation
From a valuation perspective, the stock presents an attractive opportunity, trading at a discount relative to the industry benchmark. With a forward 12-month price-to-sales ratio of 0.65, which is below the industry average of 0.93 in the past year, the stock offers compelling value for investors seeking exposure to the sector. It currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
Signet’s North America & International Units- a Key Hurdle
Despite the overall positive performance, Signet faced a significant decline in both North American and International segments. North American sales dropped 6.9% year over year to $1.4 billion in fiscal second quarter, with a 1.6% rise in ATV but fewer transactions, leading to a 3.7% drop in same-store sales. International sales fell 15.2% to $86.5 million, due to a 13.4% decline in ATV and fewer transactions due to the sale of the prestige watch stores. Same-store sales slipped 1.7%, with sales down 15.8% on a constant-currency basis. Increased discounting has pressured profitability, with competition from independent jewelers intensifying.
Signet remains cautious about the uncertain economic environment and expects fiscal 2025 sales to be between $6.66 billion and $7.02 billion, down from $7.17 billion in fiscal 2024 Same-store sales are projected to range from a 4.5% decline to a 0.5% increase. For the third quarter of fiscal 2024, the company forecasts sales to be between $1.35 billion and $1.38 billion compared with $1.39 billion in third-quarter fiscal 2024 reflecting continued headwinds in key segments like engagement units.
Conclusion
Investors should consider SIG stock due to its strong momentum and solid operational improvements. The company’s cost-saving initiatives, digital expansion and margin growth demonstrate its focus on long-term profitability and market leadership. Additionally, its valuation remains attractive, offering potential for further gains. While there are challenges in North American and International segments, Signet’s resilience and strategic positioning in high-margin services and engagement recovery make it a compelling option for investors seeking growth in the retail jewelry sector. It currently has a Zacks Rank #3 (Hold).
Nordstrom is a leading fashion specialty retailer in the United States. The company offers an extensive selection of both branded and private-label merchandise. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nordstrom’s fiscal 2024 sales indicates growth of 0.6% from the fiscal 2023 figure. JWN has a negative trailing four-quarter average earnings surprise of 17.8%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13.1%, respectively, from the fiscal 2024 levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Steven Madden designs, sources, markets and sells fashion-forward name brand and private label footwear. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the 2023 figures. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
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SIG Stock Trading Above 200 & 50-Day SMA: What's Next for Investors?
Signet Jewelers Limited (SIG - Free Report) has demonstrated strong upward momentum, trading above its 200-day and 50-day simple moving averages (SMA). SMA is a key indicator of price stability and long-term bullish trends. SIG closed yesterday’s trading session at $103.14, ahead of its 200-day and 50-day SMA of $94.47 and $83.70, respectively. This technical strength, along with sustained momentum, reflects positive market sentiment and investor confidence in SIG's financial health and growth prospects.
Shares of the company have seen an impressive price surge over the past year, climbing 41.9% and surpassing the Zacks Retail-Jewelry industry’s 21.3% growth. This is owing to its enhanced operational efficiency and cost-saving strategies, which have also helped it to outperform the broader Retail-Wholesale sector and the S&P 500 index’s respective growth of 34.2% and 33.7% in the same period.
Image Source: Zacks Investment Research
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. This leading diamond jewelry retailer is inching toward its 52-week high of $112.06 attained on June 3, 2024, thus reflecting strong investor confidence and market optimism about its future.
Image Source: Zacks Investment Research
Signet Gains on Cost-Saving Initiatives & Digital Expansion
Signet is making substantial progress with its cost-saving initiatives, increasing its fiscal 2025 savings target from $150 million to $200 million. The company also raised its three-year cost-saving goal from $350 million to $450 million, reflecting confidence in its ability to streamline operations and improve profitability. These measures helped reduce SG&A expenses by 2.5% in the second quarter of fiscal 2025, allowing Signet to stay competitive while reinvesting in key growth areas such as new merchandise and digital expansion.
In the fiscal second quarter, Signet managed to expand both its merchandise margins and average transaction value (ATV) despite a tough promotional environment. Merchandise margin grew 120 basis points while ATV in North America increased 1.6%, driven by a focus on product offerings and brand positioning. The introduction of new categories, like lab-grown diamond fashion jewelry, which grew more than 25% year over year, played a significant role in driving this success.
Signet’s engagement sales, a critical revenue driver, are also recovering, with engagement unit sales improving approximately 400 basis points on a same-store sales basis in the second quarter. This recovery is backed by an increase in customer engagement and Signet expects further growth during the holiday season. The resurgence in the bridal segment is crucial for the company’s financial performance as engagement-related purchases are a key component of its overall sales.
The company’s services segment has shown consistent growth, with revenues rising 1.4% in the fiscal second quarter. High-margin services like extended service agreements in the lab-grown diamond category have driven this growth. Additionally, Signet's digital sales have improved significantly with new website features and better vendor communication systems, thereby positioning it for further success in the online market.
SIG Stock’s Attractive Valuation
From a valuation perspective, the stock presents an attractive opportunity, trading at a discount relative to the industry benchmark. With a forward 12-month price-to-sales ratio of 0.65, which is below the industry average of 0.93 in the past year, the stock offers compelling value for investors seeking exposure to the sector. It currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
Signet’s North America & International Units- a Key Hurdle
Despite the overall positive performance, Signet faced a significant decline in both North American and International segments. North American sales dropped 6.9% year over year to $1.4 billion in fiscal second quarter, with a 1.6% rise in ATV but fewer transactions, leading to a 3.7% drop in same-store sales. International sales fell 15.2% to $86.5 million, due to a 13.4% decline in ATV and fewer transactions due to the sale of the prestige watch stores. Same-store sales slipped 1.7%, with sales down 15.8% on a constant-currency basis. Increased discounting has pressured profitability, with competition from independent jewelers intensifying.
Signet remains cautious about the uncertain economic environment and expects fiscal 2025 sales to be between $6.66 billion and $7.02 billion, down from $7.17 billion in fiscal 2024 Same-store sales are projected to range from a 4.5% decline to a 0.5% increase. For the third quarter of fiscal 2024, the company forecasts sales to be between $1.35 billion and $1.38 billion compared with $1.39 billion in third-quarter fiscal 2024 reflecting continued headwinds in key segments like engagement units.
Conclusion
Investors should consider SIG stock due to its strong momentum and solid operational improvements. The company’s cost-saving initiatives, digital expansion and margin growth demonstrate its focus on long-term profitability and market leadership. Additionally, its valuation remains attractive, offering potential for further gains. While there are challenges in North American and International segments, Signet’s resilience and strategic positioning in high-margin services and engagement recovery make it a compelling option for investors seeking growth in the retail jewelry sector. It currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks are Nordstrom Inc. (JWN - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Nordstrom is a leading fashion specialty retailer in the United States. The company offers an extensive selection of both branded and private-label merchandise. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nordstrom’s fiscal 2024 sales indicates growth of 0.6% from the fiscal 2023 figure. JWN has a negative trailing four-quarter average earnings surprise of 17.8%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13.1%, respectively, from the fiscal 2024 levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Steven Madden designs, sources, markets and sells fashion-forward name brand and private label footwear. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the 2023 figures. SHOO has a trailing four-quarter average earnings surprise of 9.5%.