CTHR Charles & Colvard, Ltd.
Sector financial performance:
This company, primarily a manufacturer, marketer, and distributor of moissanite jewelry, has been grouped into moissanite jewelry manufacturers sector in personal items industry.
It seems that, based on the typical company data, the demand for moissanite jewelry products has been weak and presented a downturn trend after boom of 2015 as indicated by the general decrease in sale of both online and stores retail channels. The trend in this sector seems very consistent with the performance in diamond market during the same period of time.
It seems that, due to pressure of sales, companies in this sector have managed to lower costs from both production and management compensation. We have seen much improved companies’ gross margin (up to 43% in 2017) and significantly decreased SG&A as percentage of sales ( down to 45% in 2017). The typical operating margin of companies in 2017 is about -3%.
The typical average stock price/sales cash flow ratio is about 1.2.
It seems that the demand for jewelry products of this company has been weak and decreasing in the past two years since boom of 2015 as indicated by compounded decrease in sales of both loose jewels and finished jewels in 2017 and 2016.
The 2017 compared with the 2016
Revenue decreased by about 7% primarily due to decrease of 23% in sales of loose jewels offset by increase of 35% in sales of finished jewels as a result of expanding presence in multiple retail channels.
The 2016 compared with the 2015
Revenue increased by about 14% primarily due to increase of 42% in sales of loose jewels offset by decrease of 27% in sales of finished jewels as a result of decrease in online sales.
The fiscal 2015 compared with 2014
Revenue increased by about 20% primarily due to increase of 17% in sales of loose jewels and increase of 23% in sales of finished jewels as a result of expanding in online retail sales.
Its gross margin (including staffing, rent, operating costs) has increased from about 30% to about 43% in 2017 primarily due to lower raw materials costs and saving of costs. With a largely improved SG&A as percentage of sales (decreased to about 45%) due to costs cutting (compensation mainly), its operating margin increased significantly to -3% in 2017.
This stock currently has a stock price/sales ratio of 1.2. We think that its stock is being relatively overvalued considering declining demand for its products.
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