Of the three major jewelry businesses that reported earnings last week, Signet Jewelers (NYSE:SIG) wasn't quite the star, but it still performed respectably. The company, which is behind mall staple jewelry stores such as Kay and Jared, is growing top-line sales, and has its key brands posting impressive same-store sales growth. Compared to direct competitor Zale (NYSE: ZLC) and higher-market Tiffany, Signet continues to trade at a discount. Does this present an opportunity for investors or is there good reason the company's stock is on sale?

Earnings recap
Kay Jewelers led the charge in this past quarter as the company posted a 5.8% gain in same-store sales. Sales overall grew 7.7% to $716.2 million for 2013's third quarter. In the U.S., sales bumped up nearly 10%, but a slight decrease in the U.K. operations kept the numbers slightly lower. Signet's Ernest Jones had fewer stores with Rolex watches, which looks to be a culprit for the year-over-year decrease.

Following Kay's lead, Jared saw same-store sales growth of 3%, while e-commerce grew more than 16%.

Gross margin contracted slightly, from 32.9% to 31%. Management attributes this to the integration of Ultra, a chain of stores that Signet acquired in 2012 for $57 million.

On the bottom line, the company earned $33.6 million, or $0.42 per share. This comes in a penny below last year's earnings, or about 2.6% on a net income level. Without the Ultra acquisition, earnings would have ticked up $0.02 to $0.45 per share.

What it all means
Signet is doing a great job at growing through its organic channels as well as bolt-on acquisitions. Though the mega chains across the U.S. and abroad have a solid footprint, much of the jewelry store landscape remains fractured -- a smattering of independently owned stores mixed in with the corporations. Picking up the successful independent chains, such as Ultra, is a worthwhile market-share grab in the long term, as long as management paid the right price. For Ultra, investors will have to see some more data before determining the strength of the acquisition.

Signet also recently purchased a diamond-polishing facility in Botswana in an effort to improve its supply chain.

Valuation-wise, Signet is appealing at 14 times forward earnings. This comes in at a steep discount to Tiffany's 20 times earnings, and a good bit below Zale's 17.56 times. Investors will want to keep an eye on the bottom line more than the top here, as Signet could stand to improve margins and operating efficiencies (the diamond facility should help somewhat). If the impressive top-line and store-level gains can travel down to the bottom of the income statement, we may see the market award a richer multiple that is more in line with peers.

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