Here's How Signet (SIG) Is Poised Just Ahead Of Q4 Earnings

Signet Jewelers Limited (NYSE:SIG) is scheduled to report fourth-quarter fiscal 2020 results on Mar 26, before the opening bell. We note that in the trailing four quarters, the company’s bottom line outperformed the Zacks Consensus Estimate by 65.9%, on average.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings has remained unchanged over the past 30 days at $3.47. However, the consensus mark suggests decrease of 12.4% from the prior-year quarter’s figure.

Key Things to Note

Signet’s International segment has been a concern for a while now. The company has been witnessing soft same-store sales (comps) performance. Apparently, comps in the International segment fell 3.1% during the nine-week period ended Jan 4, 2020 or holiday season. Further, the division’s brick and mortar sales fell 6% due to lower sales across categories and a tough operating backdrop in the United Kingdom. Moreover, Signet’s total sales during the period decreased 1% to $1,817.4 million. Also, its brick and mortar comps dipped 0.2%. During its holiday results announcement, management projected sales of $2.12 billion for the fourth quarter of fiscal 2020. This view includes a negative impact of $55 million, owing to store closures. Signet anticipated adjusted earnings per share in the range of $3.44-$3.52 for the quarter under review, down from $3.96 earned in the year-ago quarter.

Nevertheless, the company has been gaining from significant investments to augment digital sales and ‘Signet Path to Brilliance’ plan, which is designed to boost savings and engage in customer-centric growth. Impressively, Signet’s e-commerce sales during the holiday period increased 13.5% year over year to $252.3 million. Also, e-commerce sales grew 13.3% and 15.8% at the company’s North America and International segments, respectively. Signet’s online jewelry retailer James Allen, reporting same-store sales growth of nearly 27% during the season, contributed to e-commerce growth.

Further, Signet’s total comps were up 1.6% in the holiday season, with comps growth of 2% in the North America segment. Also, the company witnessed notable improvement at its Zales, Piercing Pagoda and Peoples brands. For fourth-quarter fiscal 2020, the company anticipated comps to rise 1.1% year over year at the holiday sales announcement. It envisioned adjusted operating income in the range of $254-$259 million.

What the Zacks Model Predicts

Our proven model doesn’t predict an earnings beat for Signet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Signet has a Zacks Rank #3 but an Earnings ESP of 0.00%.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

WD-40 Company (NASDAQ:WDFC) currently has an Earnings ESP of +2.86% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fastenal Company (NASDAQ:FAST) currently has an Earnings ESP of +0.36% and a Zacks Rank #3.

CarMax, Inc. (NYSE:KMX) presently has an Earnings ESP of +0.13% and a Zacks Rank #3.

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