Challenges persist

Signet Jewelers (SIG) stock is expected to benefit from its better-than-expected performance in the first quarter of fiscal 2020. However, persisting challenges could limit its recovery. Signet Jewelers’ top line is expected to continue to fall, reflecting lower same-store sales. Meanwhile, challenges in the United Kingdom and adverse currency rates are expected to remain a drag.

Will Signet Stock Get a Boost from Its Q1 Beat?

The company’s management expects its same-store sales to decrease 2.5%–3.5% in the second quarter of fiscal 2020. Meanwhile, its full-year same-store sales are expected to mark a decrease of 1.5%–2.5%. Signet’s adjusted EPS are also expected to stay low. Its management expects its adjusted EPS to be in the range of $0.23–$0.30 in the second quarter. It posted adjusted EPS of $0.52 in the second quarter of fiscal 2019.

The continued weakness in Signet’s sales and earnings and the challenging operating environment, including the US-China trade spat, could limit the recovery in its stock. However, the company’s multiyear low valuation provides some comfort.

Stock performance

Shares of Signet Jewelers have underperformed the broader markets so far this year and have fallen 38.9% on a YTD (year-to-date) basis as of June 5. The fall in SIG’s price reflects the company’s continued weak financial performance. In comparison, shares of Tiffany & Co. (TIF) are up 14.8% YTD.

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