Signet Jewelers Ltd. (SIG): This Stock Can Add Shine to Your Portfolio

Although both Signet and Tiffany have ventured into e-commerce, Blue Nile Inc (NASDAQ:NILE) is the only listed online retailer of diamonds and jewelry. Sales outside the U.S. represented approximately 16% of Blue Nile’s fiscal 2012 sales, implying significant room for international expansion. At the start of the year, Blue Nile appointed Xiu.com, a Chinese luxury shopping website as the exclusive online distributor of its fashion jewelry in China. Although Chinese consumers could enter Blue Nile’s Chinese site to purchase jewelry, it is obviously not as effective as a home grown Chinese site like Xiu.com in driving sales.

Signet is valued at a discount to its peers with a forward P/E of 13. Comparatively, Tiffany & Co. (NYSE:TIF) Blue Nile trade at 19.3 and 30.5 times forward P/E, respectively.

Conclusion

It is typical to judge stocks and sectors based on preconceived connotations. But, the numbers speak for themselves. It is hard to link Signet, which has only registered a single year of losses and negative free cash flow in the past ten years, with the cyclical characteristics of a discretionary consumer stock. Moreover, Signet is attractively valued relative to its peers on a forward P/E basis and might make for a good investment.

The article This Stock Can Add Shine to Your Portfolio originally appeared on Fool.com and is written by Mark Lin.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.