Should I buy Signet Jewelers shares in July 2022?

Signet Jewelers Limited (NYSE: SIG) reported strong first-quarter results this month, but the company’s shares are still not able to stabilize.

The company’s management updated financial guidance for the second fiscal quarter and for the full 2023 fiscal year.

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Store sales continue to grow

Signet Jewelers is the world’s largest retailer of diamond jewelry that operates approximately 2,800 stores with brands in the US, UK, and Canada.

The most popular brands of this company are Kay Jewelers, Zales, Diamonds Direct, Jared, Banter by Piercing Pagoda, JamesAllen.com, Rocksbox, Peoples Jewellers, H.Samuel and Ernest Jones.

Signet Jewelers reported first-quarter results at the beginning of this month; total revenue has increased by 8.9% Y/Y to $1.84 billion, while the non-GAAP earnings per share were $2.86 (beats by $0.48).

Positive information is that store sales grew 2.5% from the prior year as international sales accelerated while non-GAAP operating margin expanded in the face of growing inflation and supply chain problems. CEO Virginia C. Drosos said:

Our scale, strong balance sheet, and diversified banner portfolio provide flexibility to navigate macro-level uncertainties, deliver consistent annual double-digit operating margin, and continue investing in differentiated capabilities to widen our competitive advantages.

The company’s management updated financial guidance for the second fiscal quarter and for the full 2023 fiscal year. Total revenue for the second fiscal quarter should be between $1.79 billion and $1.82 billion vs. a consensus of $1.81 billion, while the income from operations should be between $188 million and $204 million.

Total revenue for the full fiscal year should be between $8.03 billion and $8.25 billion vs. a consensus of $8.03 billion, while the income from operations should be between $921 million and $974 million.

It is also important to mention that Signet declared a $0.20/quarterly share dividend which will be payable on August 26 to stockholders of record as of July 29, 2022.

Fundamentally looking, Signet Jewelers trades at less than three times TTM EBITDA, and with the market capitalization of $2.74 billion, shares of this company represent a good opportunity for long-term investors.

Technical analysis

Signet Jewelers’ stock price has fallen more than 25% from its recent highs above $80 registered in April, and the current share price could be a good entry price for long-term investors.

If the price jumps above $65, it will signal to trade Signet Jewelers shares, and the next target could be $70.

The important support level stands at $50, and if the price falls below this level, it would be a “sell” signal, and we have the open way to $45.

Summary

Signet Jewelers Limited reported strong first-quarter results this month and the company’s management updated financial guidance for the full fiscal year. Signet Jewelers’ stock price has fallen more than 25% from its recent highs above $80 registered in April, and the current share price could be a good entry price for long-term investors.

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