SIG

Signet Jewelers Ltd

Consumer


Presented:11/07/2018
Price:$60.09
Cap:$3.12B
Current Price:$99.53
Cap:$4.38B

Presented

Date11/07/2018
Price$60.09
Market Cap$3.12B
Ent Value$4.57B
P/E RatioN/A
Book Value$26.98
Div Yield2.46%
Shares O/S51.91M
Ave Daily Vol1,536,232
Short Int16.17%

Current

Price$99.53
Market Cap$4.38B
Signet Jewelers Ltd. engages in retailing of jewelry, watches and associated services. It operates through the following business segment: Sterling Jewelers, Zale, UK Jewelry, and Others. The Sterling Jewelers segment operates nationally in malls and off-mall locations. The Zale segment is operates Zale Jewelry and piercing Pagoda. The UK Jewelry segment operates in shopping malls and off-mall locations principally as H.Samuel and Ernest Jones in the United Kingdom and Channel Islands. The Others segment is comprised of the corporate administrative functions of the company. The company was founded in 1949 and is headquartered in Hamilton, Bermuda.

Publicly traded companies mentioned herein: Signet Jewelers Ltd (SIG)

Highlights

Signet Jewelers (SIG), the owner of Kay, Jared, and Zales, among others, is the largest retail jewelry company in the US. The presenter is short the stock due to a belief that the stock’s recent outperformance (up ~10% as of Nov 7) is unsustainable. SIG stock has benefitted from the sale of the financing arm, as well as some level of “excitement” following slightly positive comps over the most recent two quarters, said the presenter. However, looking at adjusted EBITDA through the first two fiscal quarters of 2018 shows a 50% decline YoY, and its store base is broadly exposed to the declines in foot traffic seen at malls around the US. Given the headwinds facing the business, the presenter is modeling $2 per share of earnings in 2019 and thinks a 15x multiple is fair (for a $30 target, or ~50% downside risk).

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Idea Discussion

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