The retail sector has been among the fastest industries to make operational changes to overcome pandemic-led challenges. Since the early days of the pandemic, many companies have brought a critical focus to their online presence and home delivery systems. And despite the rising popularity of physical shopping lately, the convenience of…
online shopping has allowed online retail sales to increase 39% year-over-year in the first quarter of 2021—nearly triple the increase in the 2020 first quarter.
Given rising consumer spending, several retail stocks have gained momentum of late. This is evident in the S&P Retail Select Index’s 120.2% and 50% gains over the past year and year-to-date, respectively, versus the broader S&P 500 index’s 36.6% and 16.3% returns.
Signet Jewelers Limited (SIG – Get Rating) and Zumiez Inc. (ZUMZ – Get Rating) are currently trading above their 50-day and 200-day moving averages. Given the favorable backdrop, we expect these two stocks to maintain their momentum in the near term.
Hamilton, Bermuda-based SIG is the world’s largest retailer of diamond jewelry and largest specialty jewelry retailer in the U.S., U.K. and Canada. The company operates through five segments: its Sterling Jewelers division; Zale division, which consists of the Zale Jewelry and Piercing Pagoda operations; U.K. Jewelry division; and Other.
On April 6, SIG acquired Rocksbox, an innovative jewelry rental subscription platform. Amid the growing popularity of digitization and subscription-based services, this acquisition should allow the company to expand its customer reach and increase its revenues significantly.
SIG’s revenues increased 98.2% year-over-year to $1.69 billion in its fiscal first quarter, ended May 1. Its operating income grew 156.3% from its year-ago value to $168.70 million, while its net income improved 170.2% year-over-year to $138.40 million. The company’s EPS increased 156.3% year-over-year to $2.23.
Analysts expect SIG’s revenues to increase 27.8% year-over-year to $6.68 billion in the current year. A $7.09 consensus EPS estimate for the current year indicates a 236% rise from the prior year. Moreover, SIG surpassed the Street’s EPS estimates in each of the trailing four quarters.
Shares of SIG have gained 553.2% over the past year, and 181.2% year-to-date. It is currently trading above its $71.09 and $56.24 respective 50-day and 200-day moving averages, indicating an uptrend. Furthermore, the stock is currently trading just 9.4% below its 52-week high of $83.00.
It is no surprise that SIG has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has A grade for Growth, Value, and Momentum, and a B grade for Quality. Among the 65 stocks in the A-rated Fashion & Luxury industry, SIG is ranked #5.
To see additional SIG ratings for Sentiment and Stability, click here.
ZUMZ is a specialty retailer of apparel, footwear, accessories, and hardgoods for young men and women. Its hardgoods offerings include skateboards, snowboards, bindings, components, and other equipment. ZUMZ is based in Lynnwood, Wash.
ZUMZ’s net sales…
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