Signet (SIG) Down 37% In 6 Months, What's Hurting The Stock?

Are you still holding shares of Signet Jewelers Limited (NYSE:SIG) and waiting for a miracle to take the stock higher in the near term? If yes, then you might lose more money as chances are very slim that the stock, which lost its value by 36.6% in the past six months, will take a U-turn in the near term. Moreover, the Zacks categorized Retail-Jewelry Stores industry declined only 6.8% in the same time. Let’s delve deeper and try to find out what is taking this Zacks Rank #5 (Strong Sell) company down the hill.

The sharp decline in share price is primarily due to dismal sales surprise history. Evidently, first-quarter fiscal 2018 marked the company’s 10th straight top-line miss. Moreover, sales declined year over year, with results being hurt by a tough retail landscape, reduced spending on jewellery and certain company-specific hurdles like unfavourable timing of Mothers’ Day holiday. This also hurt Signet’s same-store sales, which tumbled 11.5% in the quarter, thus continuing the dismal trend. Prior to this, same-store sales declined 4.5%, 2% and 2.3% in the fourth, third and second quarter of fiscal 2017, respectively.

Following a dismal first quarter where both the top line and bottom line lagged estimates and declined year over year, management reiterated tepid outlook for fiscal 2018. The company expects same-store sales in fiscal 2018 to decline in the range of low to mid-single digit. In fiscal 2017, same-store sales had fell 1.9%. Further, the company anticipates earnings per share between $7.00 and $7.40, in comparison with fiscal 2017 figure of $7.45.

Let’s look at Signet Jewelers’ earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company. In the past 30 days, the Zacks Consensus Estimate for fiscal 2018 and 2019 has declined by 4.6% and 6.5% to $6.77 and $7.10, respectively. Moreover, the consensus estimate for the second quarter of fiscal 2018 has also moved down 7.5% to $1.11.

Stocks to Consider

Better-ranked stocks worth considering in the retail space include Aaron's, Inc. (NYSE:AAN) , Best Buy Co., Inc. (NYSE:BBY) and The Children's Place, Inc. (NASDAQ:PLCE) . All these three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aaron's has reported better-than-expected earnings in the trailing four quarters, with an average beat of 10.6%.

Best Buy has an impressive long-term earnings growth rate of 11.8% and has also surpassed the Zacks Consensus Estimate in the preceding four quarters, with an average earnings beat of 33.8%.

The Children's Place has reported earnings beat in the last four quarters, with an average of 36.6%.

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