Signet Jewelers (SIG 3.36%) is the world's largest retailer of diamond jewelry. It's also an attractive value stock that has jumped 400% over the last five years as the company cut costs and adapted its business model to the digital era.
After surging in the late stages of the pandemic, benefiting from stimulus packages that gave consumers money to spend, Signet had struggled through 2023 and 2024 as comparable sales declined due in part to a delay in engagements during the pandemic.
However, in 2025, the company has returned to growth driven by its fashion, or non-bridal, business, a surge in lab-grown-diamond business, easier comparisons with results a year ago, successful efforts to manage tariffs, a focus on its top brands Kay, Zales, and Jared, and growth in its services business. Additionally, the bridal business has stabilized as engagements are recovering from the post-pandemic lull.
With Signet's second-quarter earnings report hitting the wire on Tuesday morning, let's take a look at whether the leading jewelry stock is a buy.
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Signet tops estimates
Signet delivered another quarter of comparable sales growth, showing the company's Grow Brand Love strategy is paying off. Comparable sales rose 2% in the second quarter, driving overall revenue up to $1.54 billion, topping estimates at $1.5 billion.
Gross margin rose 60 basis points to 38.6%, driven by higher average unit retail prices, particularly in fashion, which rose 12%, contributing to an overall average unit retail increase of 9%.
In an interview with The Motley Fool, CFO/COO Joan Hilson noted that lab-grown diamonds were driving the increase in average unit retail as the penetration rate of lab-grown diamonds in fashion rose from 7% in the quarter a year ago to 12%.
That helped drive adjusted operating income up 20% to $85.4 million, and the company reported adjusted earnings per share of $1.61, up from $1.25 in the quarter a year ago, and significantly better than estimates of $1.24.
Additionally, Signet raised its full-year guidance on the report. It now sees revenue of $6.67 billion to $6.82 billion, up from a previous range of $6.57 billion to $6.8 billion, and it raised its same-store sales forecast for the year from -2% to +1.5% to -0.75% to +1.75%, showing it's aiming for positive comparable sales for the full year. Finally, it lifted its adjusted EPS target from $7.70 to $9.38 to $8.04 to $9.57.
What investors learned from the report
Signet's Grow Brand Love strategy under new CEO J.K. Symancyk is delivering results as the company posted same-store sales growth of 5% for the second quarter in a row at its biggest brands, Kay, Zales, and Jared.
A core component of that strategy is investing in its biggest brands, and Hilson said that the company has been making changes at its banners to ensure that they play a unique role in the company's portfolio strategy and that they're not overlapping with other brands. For instance, it's making an effort to separate Blue Nile from James Allen, two primarily online brands, with Blue Nile focused on higher price points and James Allen on the entry level.
Hilson added, "We're going through that testing and evaluation phase at the moment all toward the end of identifying unique positioning within our portfolio for each of the brands."
Is Signet a buy?
Signet continues to look like a good value, trading at a forward price-to-earnings ratio of 10 based on its updated guidance, and it continues to spin off free cash flow.
The company is also tactically buying back stock to take advantage of any dips in the share price, and it has reduced shares outstanding by 8% over the last year to 41.1 million.
If the company can continue to deliver growth on the top and bottom lines, the stock looks well-positioned to move higher. Based on the early results from the Grow Brand Love strategy and its valuation, the stock should have more room to run higher.
