The world’s largest diamond retailer, Signet Jewelers (US:SIG), rallied more than 20% on Tuesday on strong third quarter financial results.

For the third quarter, Signet generated sales of $1.58 billion, rising marginally from the $1.54 billion generated in 2021, but same store sales fell 7.6%. The results topped the $1.50 billion consensus forecast.

Operating income fell 55% over the year to $48.4 million from $106.9 million in 2021 as inflation bit.

Net profit fell 66% to $28.8 million from $83.9 million in 2021. Earnings per share fell to 60 cents from $1.45 a year ago. On a non-GAAP underlying basis, Signet generated EPS of 74 cents, more than doubling the forecasts near 30 cents.

Signet said it repurchased $20.2 million of its stock through its active buyback program and upgraded fourth quarter and full year financial expectations.

Chief Financial Officer Joan Hilson told investors, “We’re raising our full-year guidance with confidence in the sustainability of an annual double-digit non-GAAP operating margin, which reflects current business trends and is now inclusive of Blue Nile.”

Signet upgraded its sales outlook to $7.77 to $7.84 billion from $7.60 to $7.70 billion. And it expects 2023 operating income between $809 to $850 million, compared to a previous $787 to $828 million.

The company also raised its earnings per share outlook to $11.40 to $12.00, from $10.98 to $11.57 before.

Analyst Mauricio Serna from UBS investment bank told investors the guidance upgrade implies a 4-10% increase in consensus numbers to be within the new range. Serna expects macroeconomic headwinds to persist but kept a buy rating on the stock and believes it’s an attractive turnaround play.

UBS expects Signet initiatives implemented over the last four years to generate sustainable outperformance in the diamond sector. The firm held its $79 target firm after the results.

Signet’s analysts generate a consensus overweight rating and an average $77.30 target price. The analysts are evenly split on their ratings, half calling it a buy and half a hold.

Fintel data show options sentiment moving back into bullish territory after a three month run of bearish feelings. Signet’s put/call ratio fell to its barely bullish handle, from 0.98, falling from above 1.60 in September and October.

The put/call ratio trend is determined by underlying put and call option demand for a stock over time.

This article originally appeared on Fintel

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