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Signet Jewelers (SIG) Q1 Earnings: Factors Playing a Role

Zacks Equity Research
Updated

Signet Jewelers Limited SIG is slated to report first-quarter fiscal 2019 results on Jun 6. Last quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 0.5%.

Which Way Are Top & Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for first-quarter stands at a loss of 11 cents per share, against earnings per share of $1.03 reported in the year-ago quarter. We note that the Zacks Consensus Estimate remained unchanged in the past 30 days.Also, the bottom line missed the consensus mark in the trailing four quarters, the average being 4.1%. The analysts polled by Zacks expects revenues of around $1,429 million, which shows a 1.9% improvement over the year-ago figure.

Factors at Play

Signet Jewelers’ focus on digital marketing and e-commerce bodes well. Total e-commerce sales in the fourth quarter rose 56.8% year over year. The sharp rise in e-commerce sales was primarily driven by the R2Net buyout. Additionally, in an effort to drive growth over the long run, Signet Jewelers announced strategic initiatives, which will continue over the next three years. Notably, the company’s three-year strategic initiatives focus on cost effectiveness. A portion of this cost savings will be used to invest in growth initiatives, which include e-commerce development, omni-channel capabilities and product innovation.

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Signet Jewelers Limited Price, Consensus and EPS Surprise

 

Signet Jewelers Limited Price, Consensus and EPS Surprise | Signet Jewelers Limited Quote

Further, in an effort to enhance store experience, the company plans to develop innovative store concepts. Currently, it is focusing on diversifying store base. Apart from this, Signet Jewelers holds a significant position in the world jewelry market, courtesy of its distinctive brand appeal. The company is well positioned to augment performance in the long run by leveraging capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes.

However, margins, which have been declining over the past few quarters, are likely to remain under pressure in the to-be-reported quarter due to rise in investment and promotional expenses. Further, waning same store sales and mall traffic remain major concerns.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Signet Jewelers is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Signet Jewelers has an Earnings ESP of 0.00%. Although the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

Stocks With Favorable Condition

Here are some companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat.

G-III Apparel Group, Ltd. GIII has an Earnings ESP of +28.57% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Under Armour, Inc. UAA has an Earnings ESP of +38.85% and a Zacks Rank #3.

The Kroger Co. KR has an Earnings ESP of +2.36% and a Zacks Rank #3.

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Signet Jewelers Limited (SIG) : Free Stock Analysis Report
 
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