Apparently, activist hedge fund operator Corvex Management went to Jared. And Kay Jewelers, Belden Jewelers, and Marks & Morgan, too. The private equity firm disclosed last Friday that it had taken a 7.8% stake in Signet Jewelers (NYSE:SIG), becoming the owner of 6.3 million of its shares.

The specialty jeweler reported three weeks ago that a lot of people woke up Christmas morning to find plenty of bling under the tree. Sales for the last eight weeks of 2013 jumped 7.7% despite a shortened shopping season, with much of the gains being made from higher sales at its Kay and Jared units, both of which enjoyed a 5.6% increase in same-store sales. Its U.K. division's Ernest Jones did even better, with an 8% jump in comps.

Yet like much of the rest of the retail industry, Signet was forced to resort to a heavy round of promotional activity to bring consumers into its stores, discounting that it expects will take a toll on margins and profitability when it reports earnings at the end of March. Shares of the jeweler tumbled more than 10% in the wake of the news and the resulting cut in fourth-quarter earnings guidance. It now expects profits to come in between $2.12 and $2.16 per share.

Tiffany (NYSE:TIF) took the same cautionary tone, reporting strong Christmas sales but keeping its guidance the same, a move that disappointed investors who were hoping the holidays would have signaled continued momentum. Lower-end peer Zale (UNKNOWN:ZLC.DL) saw a 2% increase in comparables for the same two-month period as sales at both Zales Jewelers and Zales Outlets moved higher, though they were offset by declining results at Piercing Pagoda, a kiosk-based jewelry outlet. Total sales fell to $556 million from $567 million from the year-ago period because of fewer stores operating and a drop in the Canadian exchange rate.

In its filing Friday, Corvex said it acquired the shares in Signet based on the belief that they're undervalued and represent an attractive investment. The hedge fund wants the jeweler to consider various strategic options, including leveraging its credit receivables, accelerating acquisitions, returning capital to shareholders, or using its offshore corporate structure to enhance shareholder value. For its part, Signet's management called its meetings with Corvex "constructive," but says it regularly meets with shareholders and is always looking for ways to maximize value for investors.

At just 14 times earnings estimates, Signet trades at a significant discount to its rivals. Tiffany goes for 19 times estimates while Zale trades at 20 times future earnings. Online diamond dealer Blue Nile (NASDAQ:NILE) trades at twice the valuation of Signet's peers, and though it has a lower cost structure from not having a brick-and-mortar presence, it's been having trouble converting more browsers to customers and has opted to adopt an upscale image to improve sales. Signet, however, enjoyed a 27% jump in e-commerce sales, with U.S. sales more than 24% higher in the two-month holiday selling season.

Analysts see Tiffany's commodity costs this year falling by double-digit percentages; while that should also translate to a large extent to Signet itself, Signet said it actually didn't realize the kind of cost savings during the holiday season that they expected with commodity prices falling as much as they already have. The benefits from further declines may not play out over the coming year, either.

With its discounted valuation and some strong performances from its biggest divisions, Signet Jewelers may be worth the new appraisal claimed by Corvex Management.