<div id="readability-page-1"><div> <h2>Key Points</h2><ul><li>Factors such as tariffs, commodity prices, and the overall economy continue to influence Signet's stock.</li><li>An earnings bump has given Signet a surprisingly low valuation.</li><li>10 stocks we like better than Signet Jewelers ›</li></ul>Signet Jewelers (NYSE: SIG) shot higher following the release of its fiscal fourth quarter and fiscal 2026 earnings report. The parent company of Kay, Zales, Jared, and other jewelry brands significantly beat earnings.Nonetheless, the report pointed to challenges as much as it did point of optimism. Amid this news, investors should remember two things about this consumer discretionary stock.Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an &#34;Indispensable Monopoly&#34; providing the critical technology Nvidia and Intel both need. Continue »<img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg1ODY5MC9icmlkZS1tb3RoZXItamV3ZWxyeS1iZWF1dHktd2VkZGluZy1kYXkuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg1ODY5MC9icmlkZS1tb3RoZXItamV3ZWxyeS1iZWF1dHktd2VkZGluZy1kYXkuanBnJnc9NzAw"/>Image source: Getty Images. <h2>1. Margin pressures could drive this stock in the near term</h2>Despite the stock gains, its financials offered a mixed picture. In the fourth quarter of fiscal 2026 (ended Jan. 31), sales of $2.35 billion fell by 0.7%. The one bright spot, adjusted diluted earnings, came to $6.25 per share, well above the $6.09 per share estimate.Still, challenges such as tariffs, commodity prices, or even consumer spending pressured its gross margins. Those came to $985 million, or 42%, slightly below the 42.6% in the same quarter last year.Unfortunately for investors, Signet is impacted by tariffs, as the precious metals and diamonds on which it depends are often sourced outside the U.S. Also, commodity prices, especially gold, have fluctuated significantly in recent months.<h2>2. A coming drop in its valuation could be bullish for Signet</h2>Fortunately, one factor is on track to work in Signet's favor: valuation.Its 12 P/E ratio appears compelling, especially when the S&amp;P 500's average earnings multiple is 28. Also, it earned $250 million in the fourth quarter, well above the $101 million in the year-ago quarter.In the previous year, asset impairments weighed heavily on earnings. Now, with those one-time charges greatly reduced, the higher earnings, and the forward P/E ratio just above 8, it's confirmed that it has become seriously undervalued.Additionally, that valuation accounts for the 55% increase in the stock price over the last year. Hence, even with the stock flirting with multiyear highs, the stock should have limited downside.Moreover, investors earn $1.40 per share in dividends annually, a 9% increase from last year. With that, its 1.6% dividend yield is above the S&amp;P 500 average of 1.2% and gives shareholders a cash return while they wait for the stock price to rise. Amid that dividend and low valuation, Signet's stock is likely to increase in value if business conditions improve even modestly.<h2>Signet stock should glitter in the long term</h2>Under current conditions, Signet stock is more likely to rise than fall in the long term.Admittedly, tariffs, commodity price fluctuations, and an uncertain economy are headwinds for this stock. That could put further pressure on gross margins, and after the considerable gains made over the last year, Signet stock could struggle in the near term.However, due to its large asset impairments in the past, net income has risen sharply, giving Signet stock a very low P/E ratio. When also factoring in dividend returns and payout growth, Signet stock is in an excellent position to eventually resume its move higher.<h2>Should you buy stock in Signet Jewelers right now?</h2> Before you buy stock in Signet Jewelers, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Signet Jewelers wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,179!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,058,743!* Now, it’s worth noting Stock Advisor’s total average return is 898% — a market-crushing outperformance compared to 183% for the S&amp;P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of March 23, 2026. Will Healy has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. </div></div>

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Signet Jewelers (NYSE: SIG) reported strong earnings, with adjusted diluted earnings of $6.25 per share, surpassing estimates. However, sales fell by 0.7% to $2.35 billion, and gross margins decreased to 42%. Factors like tariffs and commodity price fluctuations are impacting its financials. Despite these challenges, Signet's low P/E ratio of 12 compared to the S&P 500's 28 suggests it is undervalued. The stock has risen 55% over the past year, and with a dividend yield of 1.6%, it may continue to perform well in the long term, although short-term pressures remain.

- Signet Jewelers' stock has risen following a strong earnings report, yet faces challenges from tariffs and fluctuating commodity prices.  
- Despite a mixed financial outlook with a slight sales decline, the stock remains undervalued with a compelling P/E ratio and growing dividends, indicating potential for long-term growth.  
- Investors should weigh these factors carefully, as external pressures could impact future performance, and alternative investment options have been suggested.

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