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Signet (SIG) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research
·4 min read

Signet Jewelers Limited SIG is likely to witness a decline in its top and bottom lines when it reports third-quarter fiscal 2021 results on Dec 3, before the opening bell. The Zacks Consensus Estimate for fiscal third-quarter revenues is pinned at $1,095 million, indicating a decline of 7.8% from the prior-year quarter’s tally. Nonetheless, we note that the rate of sales decline is likely to decelerate sharply on a sequential basis. The company had witnessed a decline of 34.9% in the last-reported quarter.

Moreover, the consensus mark for the quarter stood at a loss of 86 cents, which narrowed from a loss of 90 cents pegged 30 days ago. The consensus estimate also shows a sequential improvement from a loss of $1.13 per share reported in the second quarter. However, the consensus estimate is wider than the loss of 76 cents a share recorded in the same quarter a year earlier.

We note that the jewelry retailer delivered an earnings surprise of 28.8% in the last four quarters, on average.

Key Things to Note

Signet is not fully immune to the ill impacts of the ongoing pandemic. The impact of the resurgence of coronavirus in major trade areas, supply-chain headwinds and uncertainty related to consumers' spending ability, mainly in discretionary categories including jewelry, cannot be ruled out. Nonetheless, with the reopening of stores, things have begun to improve. Consequently, preliminary August same-store sales reflect an increase of 10.9%. However, in the last earnings release, management raised doubts about the August sales trend continuing for the rest of the third quarter.

Despite a challenging backdrop, Signet has managed to maintain its gleam on the back of strong e-commerce operations. As online transactions began gaining prominence, the company responded by pivoting to a digital-first strategy. The company has been boosting online shopping with advanced virtual experiences. The company’s investment in virtual selling has been aiding higher levels of conversion in digital and retail foot traffic. To further support growth in the digital arena, the company has been broadening online assortments alongside search and browse capabilities. Signet registered e-commerce sales growth of 65.2% in August, with penetration rates as high as 20%. Markedly, Signet is also on track with its Path to Brilliance plan. This three-year strategic initiative comprises focusing on customer-centric growth actions, enhancing efficiency and driving cost effectiveness.

What the Zacks Model Predicts

Our proven model predicts an earnings beat for Signet this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Signet Jewelers Limited Price, Consensus and EPS Surprise

Signet Jewelers Limited Price, Consensus and EPS Surprise
Signet Jewelers Limited Price, Consensus and EPS Surprise

Signet Jewelers Limited price-consensus-eps-surprise-chart | Signet Jewelers Limited Quote

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Signet carries a Zacks Rank #2 and an Earnings ESP of +13.95%.

Other Stocks to Consider

Here are a few more companies you may want to consider, as our model shows that these too have the right combination to post an earnings beat:

PVH Corp PVH has an Earnings ESP of +162.72% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ollie's Bargain Outlet OLLI presently has an Earnings ESP of +0.58% and a Zacks Rank #3.

Kroger KR has an Earnings ESP of +0.38% and a Zacks Rank #3.

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Signet Jewelers Limited (SIG) : Free Stock Analysis Report
 
The Kroger Co. (KR) : Free Stock Analysis Report
 
PVH Corp. (PVH) : Free Stock Analysis Report
 
Ollies Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
 
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