The jewelry market is poised for growth due to consumers’ increasing disposable income and innovative designs offered by the manufacturers. In addition, peoples’ changing lifestyles and increasing preference for luxurious products as status symbols have fueled the demand for jewelry. According to Mastercard SpendingPulse, jewelry sales in March 2022 rose 11.9% year-over-year.
Due to the Ukraine-Russia war and the Fed's plans for aggressive interest rate increases, the stock market has experienced massive sell-offs of late. However, we think jewelry stocks could exhibit resilience amid current market fluctuations and rebound in the near term owing to the robust demand for their products. The global jewelry market was valued at $249.02 billion in 2021 and is expected to increase at an 8.5% CAGR from 2022 - 2030.
Given this backdrop, we think jewelry stocks Brilliant Earth Group, Inc. (BRLT) and Signet Jewelers Limited (SIG), which have entered oversold territory because of the broader market sell-off, could be great additions to one's portfolio owing to their solid growth attributes and fundamental strength.
Brilliant Earth Group, Inc. (BRLT)
BRLT in San Francisco engages in the design, procurement, and retail sale of diamonds, gemstones, and jewelry worldwide. Its product assortment and merchandise include a collection of diamond engagement rings, wedding and anniversary rings, gemstone rings, and fine jewelry. The company sells directly to consumers through its omni-channel sales platform, which includes e-commerce and showrooms.
BRLT's net sales have increased 37.6% year-over-year to $121.9 million during the fourth quarter, ended Dec. 31, 2021. Its adjusted EBITDA has grown 6.2% from its year-ago value to $15.93 million, while its adjusted net income amounted to $10.9 million. Its adjusted EPS amounted to $0.11.
Analysts expect BRLT's revenue to increase 30% year-over-year to $123.81 million for the third quarter, ending Sept. 30, 2022. The $0.12 consensus EPS estimate for the third quarter, ending Sept. 30, 2022, represents a 29.8% improvement year-over-year. The stock has declined 51.6% in price over the past year.
BRLT's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
BRLT is also rated a B grade for Value and Quality. Within the A-rated Fashion & Luxury industry, it is ranked #30 of 66 stocks.
To see additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for BRLT, click here.
Signet Jewelers Limited (SIG)
SIG functions as a diamond jewelry retailer. The Hamilton, Bermuda-based company's North American segment operates jewelry stores in malls, mall-based kiosks, and off-mall locations in the United States and Canada. Its International segment operates stores in shopping malls and off-mall places, while its Other segment engages in the purchase and conversion of rough diamonds to polished stones, as well as the provision of diamond polishing services.
During its fourth quarter, ending Jan. 29, 2022, SIG's sales increased 28.6% year-over-year to $2.81 billion. Its non-GAAP operating income grew 39.9% from its year-ago value to $411 million, while its net income improved 23.6% from its prior-year quarter to $314.3 million. Its non-GAAP EPS improved 20.7% year-over-year to $5.01.
The $2.37 consensus EPS estimate for the first quarter ending April 2023 represents a 6.1% improvement year-over-year. Analysts expect SIG's revenue to increase 7.3% year-over-year to $1.81 billion for the first quarter, ending April 30, 2023. In addition, it has an impressive earnings history; it surpassed the consensus EPS estimate in three of the trailing four quarters. The company’s shares have slumped 18.5% in price year-to-date.
SIG's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has a B grade for Quality and Value. In the Fashion & Luxury industry, it is ranked #18.
In total, we rate SIG on eight distinct levels. Beyond what we have stated above, we have also given SIG grades for Growth, Momentum, Stability, and Sentiment. Get all the SIG ratings here.
BRLT shares were trading at $8.70 per share on Tuesday afternoon, down $0.05 (-0.57%). Year-to-date, BRLT has declined -51.83%, versus a -7.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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