Trade-Ideas LLC identified

Signet Jewelers

(

SIG

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Signet Jewelers as such a stock due to the following factors:

  • SIG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $129.8 million.
  • SIG has traded 590,305 shares today.
  • SIG traded in a range 234.4% of the normal price range with a price range of $6.99.
  • SIG traded below its daily resistance level (quality: 89 days, meaning that the stock is crossing a resistance level set by the last 89 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on SIG:

Signet Jewelers Limited engages in the retail sale of diamond jewelry and watches in the United States, Canada, Puerto Rico, the United Kingdom, the Republic of Ireland, and the Channel Islands. The stock currently has a dividend yield of 1%. SIG has a PE ratio of 18. Currently there are 9 analysts that rate Signet Jewelers a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Signet Jewelers has been 1.3 million shares per day over the past 30 days. Signet Jewelers has a market cap of $8.3 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.13 and a short float of 7.2% with 5.01 days to cover. Shares are down 12.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Signet Jewelers as a

buy

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • SIGNET JEWELERS LTD has improved earnings per share by 20.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SIGNET JEWELERS LTD increased its bottom line by earning $5.87 versus $4.74 in the prior year. This year, the market expects an improvement in earnings ($8.43 versus $5.87).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 19.3% when compared to the same quarter one year prior, going from $228.00 million to $271.90 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.2%. Since the same quarter one year prior, revenues slightly increased by 4.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SIG has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.

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