Insider buying can provide clues about a stock’s future direction. If an insider is willing to commit their own capital to company stock, it tells you that they expect it to go up.
In this report, we are going to highlight some interesting insider buying at Signet Jewelers Ltd (SIG:US). Signet is a jewelry company that operates nearly 3,000 stores across the US, Canada, and the UK under a number of brand names including Kay Jewelers, Zales, Jared, H. Samuel, Ernest Jones, and Rocksbox. It is the world’s largest retailer of diamond jewelry. The company is listed on the New York Stock Exchange and currently has a market capitalization of $3.9 billion.
Signet Jewelers: Insider Buying
Our insider transaction data shows that on 15 June, board member Andre Branch bought 2,700 SIG shares at a price of $73.58 per share. This purchase cost the insider just under $200,000.
This trade stands out for a couple of reasons. Firstly, it is substantial in size. Our records show that it is the second-largest insider purchase at Signet in the last four years.
Secondly, it has increased the size of Branch’s holding by 370%. This significant increase suggests that the insider is very confident that the stock is set to move higher.
It’s worth noting that Mr. Branch has significant experience in the consumer discretionary industry. Currently, he is Senior Vice President and General Manager of MAC Cosmetics North America - Estee Lauder. Previously, he served as Senior Vice President of e-Commerce and Digital Operations at L’Oréal USA where he helped grow a number of fragrance brands including Viktor & Rolf Flowerbomb, Diesel, Stella McCartney, and Ralph Lauren. So, he is likely to have a good read on the industry, and his company’s prospects.
Signet’s first-quarter results for the 13 weeks to 1 May exceeded expectations. Total sales for the quarter were $1.7 billion, an increase of over $250 million on Q1 of FY20 and more than $835 million on Q1 of FY21, with e-commerce sales up 110.3% year on year to $346.3 million.
Non-GAAP diluted EPS came in at $2.23 – a substantial increase from a loss per share of $1.59 in Q1 of FY21 and EPS of $0.08 in Q1 of FY20. Cash flow from operating activities was $161.1 million, up $169 million to Q1 21 and $56 million to Q1 20.
In relation to the outlook, management seemed confident about the future. "Our strong first-quarter results demonstrate the momentum we are building as we continue Signet's transformation. As I look ahead, I'm confident in our people and our strategy and believe 2021 will be another transformative year for Signet," said CEO Virginia C. Drosos.
"We are entering this next phase of Signet's transformation from a position of financial strength. We are confident in our ability to deliver strong shareholder return and generate cash,” added Joan Hilson, Chief Financial and Strategy Officer.
In light of these results, and the confident tone from management, we see the insider buying here as a bullish indicator.