Suddenly, Signet Jewelers Limited SIG has hogged all the attention, as its shares surged 9.4% yesterday and gained further by 1.4% during after-market trading hours. So what propelled shares of this retailer of diamond jewelry? Let’s find out.
This Hamilton, Bermuda-based company came out with its fourth-quarter fiscal 2016 preliminary earnings results that were well ahead of analysts’ expectations. Alongside, the company made some shareholder-friendly announcements. These reasons were enough to provide momentum to the stock, which otherwise was hovering close to its 52-week low of $93.45 touched on Feb 11, 2016.
Signet delivered fourth-quarter adjusted earnings of $3.63 per share that not only soared 18.6% year over year but also surpassed the Zacks Consensus Estimate of $3.58, and management’s guidance range of $3.54–$3.60 provided earlier. Comparable-store sales advanced 4.9%, coming within the company’s projection of a 4.6%–5% increase.
Management has been focusing on improving gross margin, containing operating expenses as well as revenue driving endeavors. After operating Zales for a full year, the company now expects to realize total synergies of $225–$250 million by fiscal 2018 end, up from $150–$175 million anticipated earlier.
A sturdy balance sheet allows Signet to undertake strategic initiatives and enhance shareholder returns. During fiscal 2016, Signet bought back $130 million worth of shares. The company’s board also announced a new share buyback program of $750 million in addition to the $135 million still remaining under the existing authorization. The company further raised its quarterly cash dividend by 18% to 26 cents a share from 22 cents for the first quarter of fiscal 2017.
Signet’s better-than-expected bottom-line results and the capital allocation strategy indicate that the company’s final quarter may have been an impressive one, and shareholders might see the stock move higher once the company reports its fourth-quarter fiscal 2016 financial results on Mar 24.
Zacks Rank
Signet currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail sector include Express Inc. EXPR, sporting a Zacks Rank #1 (Strong Buy), DSW Inc. DSW and Foot Locker, Inc. FL, both holding a Zacks Rank #2 (Buy).
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