NEW YORK (TheStreet) -- Signet Jewelers Ltd. (SIG) closed out the trading day Thursday with a 7.58% decrease to a one-month low of $73.63, down from its previous close of $79.67. The stock had a volume of 3,121,801 compared to its usual volume of 609,505.
The Hamilton, Bermuda-based company reported Thursday morning that its same store sales for the eight-week period that ended on Dec. 28, 2013 increased 5%. For the fourth quarter, Signet now anticipates EPS to be in the range of $2.12 to $2.16. In November, the company estimated EPS to fall in the range of $2.30 to $2.40. The consensus EPS estimate is $2.36.
For the fiscal year 2014, the company estimates EPS in the range of $4.51 to $4.55 and capital expenditures in the range of $170 million to $175 million, a $10 million decrease from its previous expectations because of the timing of information technology projects.
Signet CEO Mike Barnes said the following in the company's report:
"We were pleased to deliver 5% same store sales for the Holiday Season and were especially encouraged by both the improvement in the UK division and the strength of our eCommerce sales across divisions. I would like to thank the US and UK teams very much for their dedication, hard work, and execution of our exciting merchandise programs during the holiday selling period.
"The US Holiday Season was highlighted by a strong November and a strong finish to December. Overall, we expect fourth quarter same store sales to be within our guidance. However, additional discounting was necessary in a highly promotional retail environment that included challenging customer traffic trends and lower than anticipated commodity cost savings. We believe these factors will result in lower than expected gross margins and profitability versus our original expectations."
TheStreet Ratings team rates Signet Jewelers as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SIGNET JEWELERS LTD (SIG) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.2%. Since the same quarter one year prior, revenues slightly increased by 7.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- SIG's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SIG has a quick ratio of 1.52, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to its closing price of one year ago, SIG's share price has jumped by 46.19%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SIG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- SIGNET JEWELERS LTD' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SIGNET JEWELERS LTD increased its bottom line by earning $4.36 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($4.75 versus $4.36).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, SIGNET JEWELERS LTD has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: SIG Ratings Report