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Things to Know Ahead of Signet's (SIG) Q3 Earnings Release

Zacks Equity Research

Signet Jewelers Limited SIG is scheduled to report third-quarter fiscal 2020 results on Dec 5, before the opening bell. We note that in the trailing four quarters, the company’s bottom line has outperformed the Zacks Consensus Estimate by 59.1%, on average. In the last reported quarter, the company beat the consensus mark by a wide margin.

What to Expect This Time

The Zacks Consensus Estimate for third-quarter earnings has narrowed by 4 cents over the past seven days to a loss of $1.07. The estimated figure is a penny wider than prior-year quarter reported figure of loss of $1.06.

For revenues, the consensus mark is pegged at $1,138 million, indicating a decrease of 4.2% from the figure reported in the year-ago quarter.

Signet Jewelers Limited Price, Consensus and EPS Surprise


Signet Jewelers Limited Price, Consensus and EPS Surprise

Signet Jewelers Limited price-consensus-eps-surprise-chart | Signet Jewelers Limited Quote

Key Things to Note

Signet has been grappling with weakness in International segment for a while now due to dismal same-store sales (comps) performance mainly stemmed from softness across all categories and a tough operating environment in the U.K. Dismal comps and unfavorable foreign currency fluctuations have been hurting the company’s top-line performance.  

In the last earnings call, the company projected comps decline of 1-2% for the third quarter. The company guided sales between $1.14 billion and $1.16 billion, which indicate a decline from the reported figure of $1.19 billion in the year-ago period. Further, management expects an adjusted operating loss of $42-$50 million for the third quarter.

Signet anticipated net cost savings in the third quarter to be slightly below the second quarter owing to shift in timing of reinvestment. For the third quarter, management estimated adjusted loss per share of $1.02-$1.16. The guidance takes into account the rise in advertising costs of about $12 million due to "Always On" media strategy.

Nonetheless, the company has been focusing on omni-channel initiatives, product innovation and inventory management. It is on track with the ‘Signet Path to Brilliance’ plan, which is designed to augment savings, engage in customer-centric growth and bolster e-commerce.

What the Zacks Model Predicts

Our proven model predicts an earnings beat for Signet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Signet has a Zacks Rank #3 and an Earnings ESP of +3.74%.

Other Stocks to Consider

Here are a few other companies you may want to consider, as our model shows that these too have the right combination to post an earnings beat:

Costco Wholesale Corporation COST has an Earnings ESP of +1.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General DG has an Earnings ESP of +1.23% and a Zacks Rank #2.

Big Lots, Inc. BIG has an Earnings ESP of +3.85% and a Zacks Rank #3.

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