FUQI International, Inc. (FUQI) has soared 96.7% since we last reviewed it as a value stock on June 3. Surprisingly, it still has attractive value characteristics though it’s not nearly as cheap as it was in June.

FUQI designs luxury metal jewelry in China. The Chinese jewelry market continues to see strong growth despite the global recession.

Second quarter results, reported on Aug 6, easily beat the Zacks Consensus Estimate by 40.63%. It was the fourth quarter in a row that the company surprised on the Zacks Consensus Estimate.

The company is seeing actual strong organic revenue growth. Revenues rose 50.6% in the second quarter to $100.8 million from $66.9 million a year ago. Both the wholesale and retail segments contributed to the gain. The bigger wholesale segment grew 39.9% to $92.5 million in the quarter. Retail revenues jumped 10.2%.

Full Year Guidance Raised Again

The company is clearly optimistic about opportunities for the rest of 2009. As it did after reporting first quarter results, FUQI also raised full-year guidance again after reporting second quarter results on Aug 6.

The full-year EPS is now expected in the range of $1.83 to $1.94 compared to the May 15 guidance of $1.35 to $1.41. The most recent guidance reflects the partial-year impact of the shares issued in its recent offering which raised $120 million.

Third quarter guidance called for a range of 40 to 44 cents per share.

The company is scheduled to report third quarter results on Nov 6. Analysts are more bullish than the company as the third quarter Zacks Consensus Estimate has moved up 1 cent to 45 cents in the last month, which is higher than the company’s forecast.

Value Fundamentals Still Intact

FUQI is now a Zacks #2 Rank (buy) stock. It is trading with a forward P/E of 14.05 which is more expensive than when we last reviewed it on June 3. Back then, it was trading at just 7x forward earnings. Because of its strong growth projections, however, it has a PEG ratio of just 0.51.

The price-to-book ratio has jumped as well. It is now at 4.12 compared with just 2.08 in June which would make it a slightly more expensive stock for this parameter.

Zacks Investment Research
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