Why Signet Jewelers (SIG) Stock Is Higher

NEW YORK (TheStreet) -- Shares of Signet Jewelers Ltd. (SIG) are up 5.16% to $104.78 after the company reported first quarter 2014 earnings.

Signet had a profit of $96.6 million, or $1.20 per share, up from $91.8 million, or $1.13 per share, last year.

Excluding items, adjusted earnings increased to $1.29 per share from $1.13 a share. The company projected adjusted earnings of $1.24 to $1.28 per share.

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Revenue was $1.06 billion, up 6.3%. Analysts estimated $1.07 billion.

Same-store sales gained 3.3%, as Signet expected growth of 3% to 4%.

For the second quarter, the company expects comparable store sales to increase 3% to 5%. Adjusted EPS is expected to be 95 cents to $1.01, an increase of 13.1% to 20.2%

Analysts surveyed by Thomson Reuters projected 98 cents a share in earnings. 

"We rate SIGNET JEWELERS LTD (SIG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SIG's revenue growth has slightly outpaced the industry average of 4.6%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SIG's debt-to-equity ratio is very low at 0.01 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 1.86, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 41.02% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
  • Net operating cash flow has increased to $257.40 million or 21.12% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.54%.
  • SIGNET JEWELERS LTD's earnings per share improvement from the most recent quarter was slightly positive. 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 $4.57 versus $4.36 in the prior year. This year, the market expects an improvement in earnings ($5.15 versus $4.57).
  • You can view the full analysis from the report here: SIG Ratings Report

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