It’s a quiet day on Wall Street as all three indexes are close to flat, and crude futures are modestly in the green. Although orders for durable good rose in July, much of the good news has been priced in, and traders are now bracing for the next round of potential interest rate hikes in the coming months ahead.
In this article, we take a look at five stocks that are showing more volatility than the broader market, Signet Jewelers Ltd. (NYSE:SIG), Dollar General Corp. (NYSE:DG), Guess?, Inc. (NYSE:GES), Burlington Stores Inc (NYSE:BURL), and North Atlantic Drilling Ltd. (NYSE:NADL). In addition, we are going to discuss what the investors that we track think about these companies.
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 750 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
Signet Jewelers’ Earnings Disappoint
Signet Jewelers Ltd. (NYSE:SIG) shares are 13% in the red after the company reported underwhelming results for the second quarter of fiscal 2017, ended July 30. During the quarter, Signet earned $1.14 per share on revenue of $1.38 billion, missing estimates by $0.31 and $60 million, respectively. Revenue fell by 2.8% year-over-year as same-store sales inched lower by 2.3% and the store count rose by just seven year-over-year. For the full year, management expects similar trends, with same-store sales expected to decline anywhere from 2.5% to 1% and EPS to be in the range of $7.25 to $7.55. At the end of June, 44 funds from our database owned shares of Signet Jewelers Ltd. (NYSE:SIG).
Discount Retailer Misses the Mark, Shares Down 14%
Dollar General Corp. (NYSE:DG) earned $1.08 per share on revenues of $5.39 billion in the second quarter of fiscal 2016 (ended July 29), missing the consensus estimates by $0.01 and $110 million, respectively. Due to the strong economy, it seems that the discount consumer is shopping at higher-end stores such as Wal-Mart Stores, Inc. (NYSE:WMT). Dollar General’s same-store sales rose by only 0.7% year-over-year and its inventory increased by 8% year-over-year. For the full year, management sees diluted EPS growing 10% to 15%. The smart money as a whole hasn’t changed its opinion on Dollar General. Among the funds we track, 53 funds had a bullish position in Dollar General Corp. (NYSE:DG) at the end of the second quarter, unchanged from the previous quarter.
On the next page, we find out why Guess, Burlington Stores, and North Atlantic Drilling Ltd are on the move.