Short-term options traders are overwhelmingly bearish on SIG
Signet Jewelers Ltd. (NYSE:SIG) is surging, last seen up 5.8% to trade at $59.89. Though there was no clear catalyst for today’s positive price action, it is possible the security is enjoying broader market tailwinds after a strong batch of earnings reports. While shares are still running into resistance at the $60 level, which has been in place since June, SIG is now eyeing its third-straight win, as well as its first close above the 40-day moving average in over one month.
Short sellers are already running for the exits, with short interest down 12% in the most recent reporting period. However, the 7.15 million shares sold short still make up 15.8% of Signet Jeweler stock’s available float, or over one week’s worth of pent-up buying power.
Meanwhile, short-term options traders are overwhelmingly bearish. This is per SIG’s Schaeffer’s put/call volume ratio (SOIR) of 4.30, which ranks higher than all readings from the past year. In simpler terms, these traders have never been more put-biased.
Digging deeper, Signet Jewelers stock continues to trade at an extremely low forward price-earnings ratio of 4.26, and a price-sales ratio of 0.41. SIG also offers a dividend yield of 1.4%, with a forward dividend of 80 cents. Moreover, the fine jewelry company maintains a manageable balance sheet with $940.5 million in cash and $1.45 billion in total debt.
Although its trailing 12-month revenues have increased 2% since its 2022 report, its trailing 12-month net income is already down a massive 29%, making Signet Jewelers stock a massive short- and long-term risk. In general, this diamond business presents too many uncertainties for the profit potential to be worth the possible losses.
Image and article originally from www.schaeffersresearch.com. Read the original article here.