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Eye on Signet Jewelers Ltd as a growth stock

02 Apr 2015 • About Signet Jewelers Ltd ($SIG) • By InTwits

Signet Jewelers Ltd is a fast-growing stock in General Retailers industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story


Signet Jewelers Ltd showed growth in the last financial year. The company's revenue surged on 36.3% in FY2015. EBITDA also increased: 6.70% for the same period.

If we look for the longer period the company showed fast revenue growth of 15.2% from FY2012 to FY2015 annually. EBITDA surged on 6.59% from FY2012 to FY2015 annually.

Signet Jewelers Ltd ($SIG) financials for the last 5 years

mln. $ FY2011 FY2012 FY2013 FY2014 FY2015
Revenue3,4373,7493,9834,2095,736
Revenue growth, %9.1%6.2%5.7%36.3%
Gross margin, %36.2%38.3%38.6%37.5%36.2%
SG&A, %28.5%28.2%28.6%28.4%29.9%
EBITDA470600660681726
EBITDA growth, %27.5%10.0%3.2%6.7%
EBITDA margin, %13.7%16.0%16.6%16.2%12.7%
Net Income200324360368381
Net Income margin, % 5.83%8.65%9.03%8.74%6.65%
 
CAPEX5898134153220
CAPEX/Revenue, %1.67%2.61%3.37%3.63%3.84%
Debt3100191,461
Cash302487301248194
Net Debt/EBITDA-0.6x-0.8x-0.5x-0.3x1.7x
 
ROIC, %17.2%21.6%21.5%20.4%15.5%
ROE, %11.0%15.4%15.6%15.0%14.2%

Profitability and return on investment


Despite revenue growth EBITDA margin declined slightly from 16.2% in FY2014 to 12.7% in FY2015. In the last 3 years EBITDA margin dropped on 3.30 pp from 16% in FY2012 to 12.7% in FY2015.

Signet Jewelers Ltd shows attractive ROIC at 15.5% for the last 12 months which assumes stable development model. Three years ago it was higher at 21.6%. It's average ROIC for the last three years was 19.1%.

The company's Net Income margin dropped on 2.10 pp from 8.70% to 6.60% in FY2015. If we look for the longer period Signet Jewelers Ltd showed big decline in Net Income margin of 2.10 pp from 8.70% in FY2012 to 6.60% in FY2015.

Signet Jewelers Ltd operates at ROE of 14.2%. Average ROE for the last three years was 15.0%.

Capital expenditures (CAPEX)


In FY2015 Signet Jewelers Ltd had CAPEX/Revenue of 3.84%. CAPEX/Revenue surged on 1.23 pp from 2.61% in FY2012 to 3.84% in FY2015. It's average level of CAPEX/Revenue for the last three years was 3.61%.

Leverage (Debt)


The company has medium debt level at 1.7x Net Debt/EBITDA to maintain high growth. If we look for the longer period Signet Jewelers Ltd's leverage surged on 2.56x from -0.81x in FY2012 to 1.75x in FY2015.

Valuation vs. comparable companies


The market closed today at 1.9x EV/EBITDA for Signet Jewelers Ltd which is 87.4% lower than 15.0x General Retailers peer group avearge calculated on the basis of 60 companies. The company trades at 0.3x P/E which is 95.6% lower than 6.6x General Retailers industry avearge calculated based on 4 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Signet Jewelers Ltd traded at 2.7x EV/(EBITDA-CAPEX) which is higher vs. -1.3x General Retailers peer group avearge calculated on the basis of 4 companies.

Peers in General Retailers


Below you can find Signet Jewelers Ltd benchmarking vs. other companies in General Retailers industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
7Digital Group ($7DIG)-9.7%-27.7%16.6%171.6%
Caffyns ($78GL)-3.1%17.1%8.9%
Aa ($AA.)3.1%-0.6%0.6%1.0%
Lotte Shopping Co Ltd ($LOTS)17.0%12.5%12.6%-0.4%
French Connection Group ($FCCN)0.7%-8.4%-4.0%-5.8%
 
Median (5 companies)17.0%0.7%6.0%0.6%1.0%
Signet Jewelers Ltd ($SIG)9.1%6.2%5.7%36.3%


Top companies by Gross margin, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Aa ($AA.)62.0%60.4%63.9%64.7%64.8%
7Digital Group ($7DIG)25.6%16.5%13.9%59.0%
French Connection Group ($FCCN)51.7%48.1%47.9%47.6%46.7%
Lotte Shopping Co Ltd ($LOTS)31.5%30.5%30.7%31.2%
Caffyns ($78GL)29.2%12.7%12.1%11.9%
 
Median (5 companies)38.7%37.1%37.0%47.6%46.7%
Signet Jewelers Ltd ($SIG)36.2%38.3%38.6%37.5%36.2%


Top companies by EBITDA margin, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Aa ($AA.)43.2%35.5%37.0%42.2%37.9%
Lotte Shopping Co Ltd ($LOTS)10.7%8.8%8.2%7.4%
Caffyns ($78GL)10.8%3.0%2.0%6.5%
French Connection Group ($FCCN)5.1%2.8%-4.1%-1.7%0.4%
7Digital Group ($7DIG)-14.2%-8.4%-10.9%-34.2%
 
Median (5 companies)10.7%9.8%5.6%2.0%6.5%
Signet Jewelers Ltd ($SIG)13.7%16.0%16.6%16.2%12.7%


Top companies by CAPEX/Revenue, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Lotte Shopping Co Ltd ($LOTS)7.2%7.1%6.5%6.6%
Caffyns ($78GL)1.6%2.2%3.9%1.4%
7Digital Group ($7DIG)2.4%2.2%0.3%3.4%
Aa ($AA.)3.0%2.7%0.7%1.0%3.8%
French Connection Group ($FCCN)0.5%0.7%1.0%0.4%0.6%
 
Median (5 companies)2.4%1.9%1.0%3.4%1.4%
Signet Jewelers Ltd ($SIG)1.7%2.6%3.4%3.6%3.8%


Top companies by ROIC, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Aa ($AA.)138.0%134.4%61.1%34.9%
Caffyns ($78GL)60.8%15.4%11.1%37.3%
Lotte Shopping Co Ltd ($LOTS)7.3%5.3%4.9%3.8%
Stanley Gibbons Group ($SGI)23.3%21.3%8.9%0.0%
French Connection Group ($FCCN)10.5%4.7%-16.9%-9.1%-1.7%
 
Median (6 companies)8.9%13.3%6.9%1.9%34.9%
Signet Jewelers Ltd ($SIG)17.2%21.6%21.5%20.4%15.5%


Top companies by Net Debt / EBITDA

 FY2011 FY2012 FY2013 FY2014 FY2015
Top
Aa ($AA.)0.3x0.6x-0.0x7.7x7.9x
Caffyns ($78GL)0.5x2.0x3.0x0.7x
French Connection Group ($FCCN)-3.1x-5.6x-33.1x
 
Median (3 companies)-0.1x0.5x1.0x5.2x0.7x
Signet Jewelers Ltd ($SIG)-0.6x-0.8x-0.5x-0.3x1.7x