Signet Jewelers Stock Hits Two-Year High After Earnings Dazzle

Options are being picked up at five times what's typically seen at this point

Assistant Editor
Mar 18, 2021 at 11:06 AM
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The shares of Signet Jewelers Ltd (NYSE:SIG) are up 8.2% at $64.21 at last check, after the company reported fourth-quarter earnings of $4.15 per share --  better than Wall Street's estimated $3.54. The diamond retailer cited American e-commerce sales, and provided upbeat current-quarter and full-year guidance as well. 

Today's pop has SIG gapping to a fresh two-year high. Though the stock has been steadily moving higher for the past year, its rally accelerated at the start of the year, with help from the 20-day moving average. Year-to-date, the equity is up an impressive 131%. 

Despite the positive price action, the brokerage bunch is leaning bearish on the security. Of the four analysts in coverage, three carry a "hold" or worse rating on SIG. Plus, the 12-month consensus price target of $45.60 is around a 28% discount to current levels. 

Though short interest is down 21.3% during the last two reporting periods, it still represents a healthy 13% of the stock's available float. In other words, it would take five days to buy back these bearish bets, at SIG's average pace of trading -- leaving plenty of room for a short squeeze.

Options traders are chiming in after SIG's earnings report with overall volume running at five times what's typically seen at this point. Most popular is the April 65 call, followed by the March 75 call.

These premiums are attractively priced at the moment, too. The stock's Schaeffer's Volatility Index (SVI) of 88% stands higher than just 11% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations.


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