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Special Situation Report
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| Premier Concepts, Inc. (NASDAQ: FAUX) |
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Six Month Target Price: $3.52 |
| 52-Week Range |
$0.45 - $1.70 |
| Shares Outst. (fully diluted) |
3.69 million |
| Approx. Float |
2.70 million |
| Ratio Comparison |
| Valuation Ratios |
FAUX |
Industry |
Sector |
S & P 500 |
| Price to Sales (TTM) |
0.20 |
1.30 |
2.39 |
3.11 |
| Price to Book (MRQ) |
1.46 |
4.54 |
4.05 |
4.76 |
| Price to Tangible Book (MRQ) |
1.51 |
5.58 |
5.80 |
7.38 |
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Reasons to OWN FAUX:
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FAUX sells fashion and fine jewelry (14K GOLD, Sterling Silver and Costume) with synthetic stones for everyday and special events. |
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Fashion jewelry sells in both up and down economies. |
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FAUX was incorporated in 1988, and at that time operated almost 50 stores in various states throughout the U.S. |
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FAUX currently operates 28 stores nationwide with plans to open 4 to 5 new stores each year over the next 5 years.
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FAUX stores are currently ALL cash flow positive on an annualized basis. |
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FAUX has generated more than $10,000,000 in revenues in the last 12 months. |
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FAUX�s same store sales have increased 10.4% through the end of April, 2002. |
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FAUX has restructured and eliminated some higher-level positions and reduction in corporate overhead, saving FAUX over $500,000 Dollars annually. |
| About FAUX |
FAUX, incorporated in 1988, specializes in the marketing and retailing of high-end reproduction jewelry (faux jewelry), 14-karat gold jewelry with cubic zirconia and other synthetic stones and sterling silver jewelry with semi-precious and synthetic stones. FAUX�s national chain of 28 retail stores, which operate under the names Impostors, Elegant Pretenders, and Joli-Joli, sell jewelry that emulates classic fine jewelry, as well as pieces designed by famous jewelers. The product line also includes replicas of jewelry owned by celebrities. FAUX jewelry is created with layered gold, cubic zirconia and Austrian crystal to simulate the look of fine jewelry. FAUX also sells a collection of genuine sterling silver jewelry, featuring semi-precious and synthetic stones.
The Impostors, Elegant Pretenders and Joli-Joli stores are located in shopping malls and tourist locations. The stores are located in Southern California, Northern California, and in Arizona, Colorado, Florida, Louisiana, Maryland, Nevada, New Jersey, Pennsylvania and in the Washington, D.C. area.
FAUX�s products are comprised of approximately 40% fine jewelry reproductions and emulations of merchandise inspired by classic designers, such as Cartier, Tiffany & Co. and Harry Winston. Approximately 40% of FAUX's pieces are solid 14-karat gold, featuring cubic zirconia and other synthetic stones, and the remaining 20% are sterling silver with semi-precious stones and cubic zirconia. The use of cubic zirconia and other laboratory grown stones offers a more affordable product by emulating the look and feel of expensive gemstone jewelry. Approximately 2,500 different jewelry items are offered, with none representing more than 10% of the total annual sales. |
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| Valuation and Conclusion |
Valuation
How many times do you sit in front of the television, and flip the channels and come across QVC or HSN? If you do, then chances are pretty good that someone is selling Costume Jewelry. Through good economies and bad, this market continues to thrive. It is estimated that this market is in excess of $10 Billion Dollars and growing. Plenty of room for small companies such as FAUX to grow.
FAUX once operated almost 50 stores, and underwent a major restructuring, and currently operates 28 stores that are now all cash flow positive. It is now FAUX�s intention to open 4-5 new stores annually over the next 5 years. FAUX estimates that each store can generate $250,000-$350,000 annually, by doing simple math this equates to 15% annual sales growth. Over a 5 year period of time, sales would double to $20 Million Dollars without any increase in same store sales.
What could FAUX be worth?
In our opinion, if you look at the ratio comparisons above (provided by Multex Investor) it appears that FAUX is undervalued compared to its peers.
When we look to value FAUX on a multiple of revenues, if over the next 6 months, FAUX were to trade in the marketplace at the same multiple of revenues as its peers (which is 1.30 times), then based on FAUX�s trailing 12 months revenue of $10 Million Dollars, this would equate to a stock price of $3.52 per share. Which would be about a 250% Profit from today�s close.
Conclusion
In our opinion, Investors looking for an above-average potential return on a portion of their investment capital should give FAUX a serious look. We believe FAUX has assembled an astute, goal oriented team committed to FAUX becoming a very, very successful company. Investors at current levels may be rewarded in the short term, and beyond, as FAUX's business plan is executed.
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******* Important Notice and Disclaimer: Please Read *******
Investor Insights (II) publishes reports providing information on selected companies that II believes has investment potential. II is not a registered investment advisor or broker-dealer. This report is provided as an information service only, and the statements and opinions in this report should not be construed as an offer or solicitation to buy or sell any security. II accepts no liability for any loss arising from an investor's reliance on or use of this report. An investment in FAUX is considered to be highly speculative and should not be considered unless a person can afford a complete loss of investment. II has been hired by a third party consultant, and is contracted to receive $15,000.00 from Premier Concepts, Inc. and eighty thousand free trading shares of common stock from a third party for the publication and circulation of this report. II intends to sell all or a portion of the of the FAUX stock at or about the time of publication of this report. Subsequ!
en!
tly II may buy or sell shares of FAUX stock in the open market. This report contains forward-looking statements, which involve risks, and uncertainties that may cause actual results to differ materially from those set forth in the forward-looking statements. For further details concerning these risks and uncertainties, see the SEC filings of FAUX including the company's most recent annual and quarterly reports. |
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