Signet Jewelers stock prediction as decline after FQ3 results

On Thursday, Signet Jewelers Inc. (NYSE:SIG) shares declined by more than 3% after reporting its fiscal third-quarter results. The company announced its most recent quarterly results before markets opened, registering significant growth rates in revenue and earnings.

The company posted FQ3 same-store sales growth of 18.9% from the same quarter last year to $1.5 billion, with e-commerce sales also increasing by 14.4%. Signet added $235 million in total sales from last year’s quarter to $1.5 billion. 

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Its FQ3 non-GAAP earnings per share improved significantly from last year’s covid-hit $0.11 to $1.43, also surpassing the pre-covid quarterly loss of $0.73 per share.

Although Signet Jewelers shares have pulled back more than 18% over the last two weeks, the stock is still up more than 225% this year, leaving little room for more upward movement.

Is Signet undervalued?

From an investment perspective, Signet Jewelers shares trade at attractive trailing 12-month and forward P/E ratios of 9.05 and 10.50, respectively, making the stock an exciting option for bargain hunters.

However, analysts are less optimistic about its earnings growth, predicting a decline of more than 166% this year.

Therefore, the stock may not be an ideal option for growth investors.

Technically, Signet Jewelers shares seem to have recently pulled back to complete a downward breakout of an ascending channel formation. As a result, the stock has moved closer to the oversold conditions of the 14-day RSI.

Therefore, investors could target potential technical rebounds at about $99.61, or higher at $109.44, while $81.27 and 473.49 are support levels.

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