Is Signet Jewelers Stock a Buy in 2026?

Most investors see Signet Jewelers (NYSE: SIG) as a jewelry retailer. That framing misses what's started to happen inside the business. Signet is in the middle of a product mix revolution. Lab-grown diamonds now account for roughly 40% of its bridal band sales and 15% of its fashion jewelry revenue, the latter having doubled in a single year.

To me, this is Signet going on the offensive to spark growth. Lab-grown diamonds carry higher margins than their natural counterparts at lower price points, and they're pulling in a customer demographic that previously didn't shop at branded stores it controls like Kay, Zales, or Jared.

Image source: Getty Images.

The preliminary financial results Signet is posting recently reflect this. In its fiscal 2026 (ended Jan. 31, 2026), Signet posted approximately $6.8 billion in revenue, with same-store sales up 1.2% to 1.3% for the full year.

Operating income came in between $388 million and $393 million, and the company expects to deliver more than $500 million in free cash flow. Average unit retail rose 4% to 5% in Q4 and 6% to 7% for the full year.

These increases were driven almost entirely by the lab-grown diamond mix shift.

Lab-grown diamonds are a reason to buy

But lab-grown diamonds aren't cannibalizing natural diamond sales at Signet. They're expanding the category.

CEO J.K. Symancyk said it plainly at Citi's Global Consumer Conference this week: "It is a category extender."

Customers with a limited budget who previously bought a faux-diamond fashion piece are now spending just a little more to buy lab-grown diamond-based jewelry instead. That lifts average selling prices without requiring consumers to spend much more money.

The fashion jewelry market is massive. Financial analytics firm Jefferies estimates Signet holds just 5% of the $43 billion fashion jewelry market, compared to a 28% share of the $10 billion bridal market. The runway for fashion growth is much larger, and lab-grown diamonds are the vehicle.

Signet's capital allocation story reinforces the thesis. The company reduced its diluted share count by nearly 20% in fiscal 2025 alone, returning approximately $1 billion to shareholders through buybacks and preferred share redemptions.

It has raised its dividend for four consecutive years. Free cash flow yield sits at roughly 16%, which is remarkable for a company still growing same-store sales.

Is Signet Jewelers stock a buy?

The risks are real. Consumer spending could soften. Gold prices add cost pressure. And the company acknowledged a modest decline in gross merchandise margin in Q4 after pivoting to broader promotions with bigger price cuts to meet consumer expectations.

There's also execution risk as new CEO Symancyk rolls out the "Grow Brand Love" strategy, which involves reorganizing the business around brand-led product development and shifting over 10% of mall locations to off-mall and e-commerce channels over three years.

But at a market cap of $3.7 billion, a trailing P/E around 26, and some analyst fair value estimates of $113 against a current price near $80, the stock appears undervalued relative to its cash generation and the structural tailwind from lab-grown diamonds.

Signet is weaponizing disruption and shopping trends. That makes it a buy.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group. The Motley Fool has a disclosure policy.