Retailers on the US’s Standard & Poor’s 500 index trade at a 50 per cent premium to their UK counterparts based on a 12-month forward price earnings ratio and Signet is likely to be valued in line with its US peers.
The retailer is moving its listing to the US to reflect the fact that it generates two thirds of its sales there and more than half of its shares are held by US investors. Signet will retain a secondary listing in London.
Investec analyst David Jeary said any re-rating could be offset by a dividend cut, but last week increased his target price to 83p, bringing Signet in line with US counterpart Tiffany. He said Signet “has significant long-term organic growth potential in the US, based primarily on the roll-out of its Jared superstore format”.
On Tuesday, Signet shareholders approved the move to the US at an EGM.