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Hawk’s Nest

Signet Jewelers (SIG) Earnings Preview

by | Jun 7, 2022

Signet Jewelers (SIG) reporting earnings on 6/9 before the open with the Street looking for $2.33 on $1.8B in sales. Next quarter is guided to $2.48/$1.81B while the FY is $11.38/$8B. Shares have a strong recent history closing higher in four of the last five with an average closing move of 5.5% and a max move of 16%. The current implied move is 12.65%. Options flow has been slightly bullish recently with buyers in the June $63 calls on 6/7 and the June $65 calls bought on 6/6. The weekly $59 calls active with buyers in late May as well. A large bearish position sits in the October $50 puts, 3000X, which adjusted down from the $65 puts in early May. The $3B company trades 5.35X earnings, 0.4X sales, and 2.75X FCF with a 1.25% yield. SIG is a leading jewelry retailer with banners such as Kay Jewelers, Jared, Zales, and Diamond Direct. SIG is coming off an impressive quarter in march and continues to win significant market share of new customers, especially millennials and younger. The company has been undergoing a turnaround since early 2020 which has seen expenses fall and focus shift towards investing in their digital footprint, new value-focused propositions, and better marketing efforts. The company has positive tailwinds into the 2H from pent-up demand for big events such as weddings that were delayed due to COVID, a pickup in tourism, and steady spending from the high-end which has been more resilient during the recent retail pullback. Analysts have an average target for shares of $105 with a Street High $140. Citi has a $94 PT and they note how impressive the FY guide was in March despite overall weakness in the retail space. Wells Fargo lowering estimates in April but continues to like the long-term trajectory of the turnaround for the name and keeps a $105 PT. Short interest is 15%. Hedge fund ownership rose 3% last quarter. Melvin Capital a notable seller of stock while Green Equity is a top holder with 7.76M shares.