Signet Jewelers Share Price Forecast December 2021 – Time to Buy SIG?
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Shares of diamond jewellery retailer (NYSE: SIG) are in the red today, after closing at $87.88 as of December 9th (20:53 EST). The shares fell despite the jeweler reporting fiscal third-quarter results ahead of analyst’s figures. The shares had a huge run-up this year increasing 240% year to date. The shares previously decreased nearly 4%, after rising 4% in premarket trading.
Signet Jewelers – Technical Analysis
According to the financial statement released by Signet Jewelers, the market cap of the company is at $4.689 billion with total assets worth $6.388 billion. Revenue for 2020 was at $5.23 billion with a profit margin of -0.29%, compared to $6.14 billion in 2019.
Moving averages such as Exponential Moving Average (10)(91.94), Simple Moving Average (10)(92.22), Exponential Moving Average (20)(94.98), Simple Moving Average (20)(98.85) and Exponential Moving Average (30)(95.18) are indicating a sell action. Oscillators such as Relative Strength Index (14)(38.08), Stochastic %K (14, 3, 3)(19.59), Commodity Channel Index (20)(−98.09), Average Directional Index (14)(22.32) and Awesome Oscillator(−10.02) are neutral.
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Recent Developments
Founded in 1949, Signet Jewelers grew organically before expanding rapidly through a series of acquisitions in the late 1980s and early 1990s. It bought Zale Corporation in February 2014 with Zale shareholders receiving USD $21 a share in cash in USD$1.4 billion deal. The company announced it would not reopen 80 of its UK stores after the shutdown as a result of the pandemic.
While Telsey Advisory Group CEO and Chief Research Officer Dana Telsey was pleased with Signet’s third-quarter results, she noted that the company will now face difficult comparisons after the holidays. According to her, some consumers might begin to shift their spending toward experiences, including vacations and tickets to concerts which could put a break on its growth prospects.
The company recorded a net income for the three-month period of $92.6 million, or $1.45 per share, up from $9.3 million, or 2 cents a share, a year earlier. Signet’s sales increased to $1.54 billion from $1.3 billion a year earlier which topped estimates for $1.43 billion. Same-store sales increased by 18.9% which is well ahead of the 11.6% growth that analysts predicted.
Signet CEO Drosos also said that the company secured its holiday merchandise early this year, in anticipation of potential delays. Signet expects fiscal 2022 sales to be between $7.41 billion and $7.49 billion, which is a notable increase from the prior range of $7.04 billion to $7.19 billion. However, the company remains cautious, due to Omicron which can cause potential shifts in consumer spending patterns.
Should You Buy SIG Shares?
Signet Jewelers is the market leader by a wide margin in the U.S. and the largest diamond retailer worldwide. Investors who have picked up Signet shares last year during its 5-year lows in March and April 2020 have generated 10-bagger returns since then. Its current price/earnings ratio of around 14.5 implies room for upward movement. This is also evidenced by its most recently reported EPS which was its highest since 2018.
Another good news is that the company is recommenced its dividend. Signet has also raised its full-year revenue guidance for fiscal 2022 from a range of $6 billion to $6.14 billion to a revised range of $6.50 billion to $6.65 billion in revenue. Depending on whether the company can hit these targets, Signet can benefit from skyrocketing jewelry demand and diamond prices. Signet has he strategies and proof of execution to create lasting growth, which is a great advantage in this market. Considering all of the above, one can easily add Signet shares to one’s portfolio at the moment.
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