Signet Jewelers' Earnings: What Wall Street's Saying

Tickers in this article: SIG

NEW YORK (TheStreet) -- Signet Jewelers surged Thursday on volume that was more than five times the stock's three-month average after the company reported strong core operations and increased its cost saving and revenue targets for its May-acquisition of Zale's.

Shares of the Hamilton, Bermuda based jewelry retailer -- the owner of Jared the Galleria of Jewelry, Kay Jewelers and, most recently, Zale's -- rose 7.7% to $116.37 and hit a new 52-week-high during intraday trading on Thursday of $117.42.

Signet reported second-quarter earnings of 72 cents a share, including several charges related to its acquisition of Zale's. Excluding the items, Signet reported earnings of $1 a share, up 19% from the year-earlier period and exceeding analysts' estimates of 98 cents a share. Sales rose 39.3% from last year's quarter, to $1.23 billion, fueled by the addition of Zale's and exceeding consensus estimates of $1.19 billion. Signet completed the acquisition in May.

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The company said same-store sales of the chain's brands, excluding Zale's, rose 6.3% in the quarter. Its U.K. division delivered same-store sales growth of 4.4%, the best quarterly increase in seven years, the company said. Comparable sales in its Sterling Jewelers division, the unit that includes Kay and Jared, rose 6.7%. The company boosted its projection for revenue and cost-savings synergies from the Zale's transaction to between $150 million and $175 million, up from $100 million, previously.

Here's what Wall Street analysts were saying on Thursday.

Ike Boruchow, Sterne Agee (Buy; $135 PT)

While some investors were concerned on the timing of the Zale integration process, SIG's Q2 print carried plenty of reasons for optimism. Not only is the core Sterling business performing extremely well, but Zale is improving, synergy targets were raised ($150-175mm vs. $100mm prior) and the LT tax rate is now anticipated to be much lower (28-29% vs. 35% prior). The new and improved SIG story continues to have legs.

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