SIG - Signet Jewelers: Shares Taking A Beating But A Positive Inflection Approaches

2024-06-13 11:13:05 ET

Summary

• Signet Jewelers Limited is currently a cheap stock, but has been mostly sideways due to economic uncertainty and lack of growth.
• Despite sales being down, Signet is seeing positive impact from its membership program and expects positive same store sales in the second half of Fiscal 25.
• The company's financials show a decrease in sales and net income, but an improvement in gross margin and adjusted EPS, making it a potential buying opportunity in the mid-$90s.
• After a previously successful swing trade, the stock sets up again for another trading opportunity.

Signet Jewelers Limited ( SIG ), is by all accounts, a very cheap stock on many valuation measures . But why? After we highlighted this name for a swing trade back on December 5th , 2023, the stock made its run as predicted, but has largely been sideways ever since. In our opinion, the stock trades at a below-market valuation, given risk and uncertainty over the economy and the health of the consumer. However, luxury spending really never gets hit until the stock market takes a beating. Inflation weighs, but it has little impact on the wealthy, who make up much of Signet's customer base. Today we check back in on the stock, and with today's pullback following the just-reported Q1 earnings, traders may get an opportunity to reenter this stock in the $90s....

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