Jewelry Stocks Evaluation

The great thing about investing in stocks is that we can become a co-owner of any business we want. Being a bank shareholder or industrial enterprise, taking part in big techs business — the choice is yours. The jewelry industry is no exception.

Today we will try to answer some questions about investing in this particular industry:
Is it possible to buy Cartier without leaving home?
What is the advantage of Pandora stocks over the jewelry market giant?
How can an investment in FOSL stocks and CTHR stocks turn out?
Is MOV stock good Enough for your portfolio?

Since LVMH announced the acquisition of Tiffany & Co in 2021, there are only 2 available publicly traded companies in the industry whose brands are heard and win in top-of-minds polls.

The first one is Cartier.

Buying a Cartier is a goal for some, a pipe dream for others, and an everyday event for private investors. The rights to this brand are owned by the Swiss company , whose shares can be purchased both on the Swiss stock exchange and the OTC exchange. To find out all the tickers and markets available, visit the company page here.

CFR.SW rating according to Eyestock methodology is 75%. After analyzing the profitability, balance sheet and return on capital indicators, we came to the conclusion that this business has some investment attractiveness, although it does not reach the level that we call the benchmark for buying shares. The main reason is the instability of financial results.

“Charm” of Pandora

A more profitable and efficient business is the Danish jewelry company , which has occupied the affordable luxury segment and conquered the world with its bracelets, charms and silver and gold products through 2,400 different formats of sales points.

Pandora`s ROE (return on equity) is an outstanding 67% (CFR.SW has a similar parameter at 13%). The final Eyestock Rating of PNDORA.CO is 81%. However, since the beginning of the year, the company’s shares are up 20% on Nasdaq Copenhagen, and despite a relatively low P/E ratio of 20, the current quote is 33% above its median valuation (13), so buying at current prices in the short term may result in increased risk. The company has an additional ticker on the OTC exchange PNDZF. Check it.

SIG stock is an option

Previously, we talked about mega-cap (Cartier) and large-cap (Pandora) companies. But the highest rating in the industry belongs to a company with a market cap of just over $4B (middle-cap) — Signet Jewelers (SIG on NYSE).

Diamond jewelry retail firm is able to score 88 points in the final Eyestock Rating, only 12 behind the benchmark score. SIG shares rating has increased by 81% in 5 years and today is higher than 93% of the companies in the Consumer Discretionary sector.

Signet Jewelers has the lowest P/E ratio in the industry at 6.7, and while the stock is up 20% over the past 12 months, it is still undervalued relative to its average valuation, trading near rock-bottom multiples. The upside for SIG, according to our estimate, is 38%.

Also on the investor’s horizon, there are shares of 3 micro-cap companies: Movado (MOV), Fossil (FOS) and Charles & Colvard (CTHR). We have already hinted that we are not ambassadors for investing in micro-caps. Even though they can potentially bring «X» returns, they also carry the most significant risks.

MOV shares had a rating above 100% at the beginning of 2022, but it began to decline and reached the level of 72%. Interestingly, the stock price has done much the same, down about 35% in 2 years.

As for the others, these are micro companies with a negative Eyestock Rating, which have an average annual return of -38% and -8%. This once again confirms the effectiveness of Eyestock’s simplest approach, which is based on the fact that you first need to evaluate the company’s financial performance before searching for an entry point into its shares. We don’t want to analyze too much about these poorly performing companies — just try to avoid such investments.

Conclusion

As a result, we haven`t found a single stock with the Eyestock Rating higher than 100%, which means that at the current time, there are no publicly traded companies in the industry that would achieve the benchmark value based on all 10 financial metrics. At the same time, the shares of those companies whose value we can assess are trading above average estimates and are relatively overvalued except SIG. Look at the summary table in our stock pisck section here.

Looks like there are no viable ideas in the industry for today’s safe investments. And be careful when dealing with a stock whose rating is negative!

Invest Wisely, Accelerate Growth