Envela (ELA) to Buy Steven Kretchmer & Boost Consumer Division
Envela Corporation ELA recently announced that it has entered into a definitive deal to acquire Steven Kretchmer, Inc. Although the transaction will be made in cash, its financial terms have been kept under wraps.
Envela’s shares increased 0.8% yesterday to eventually close the trading session at $5.05.
Based in Scottsdale, AZ, Steven Kretchmer is recognized as a leading designer and manufacturer of jewelry in the United States. The company is well known for its exceptional innovation capabilities and proficiency in transforming precious metals into beautiful jewelry products. It is worth noting that Steven Kretchmer owns several patents for precious metal product inventions and alloys, including tension settings, multicolored layered golds and polarium.
Acquisition Rationale
The latest buyout is in sync with Envela’s policy of acquiring businesses to expand its market share and customer base. Envela will incorporate Steven Kretchmer into its consumer division and operate the brand as a subsidiary. The inclusion of Steven Kretchmer’s solid product line, supported by its strong designing and manufacturing capabilities, will enable Envela to expand its customer offerings and boost its consumer division.
Per the deal, Steven Kretchmer’s current management team, including its Chief Executive Officer, Claudia Kretchmer, will continue to lead the company. Post completion of the transaction, Steven Kretchmer will continue to operate from Scottsdale and maintain its employee base.
Zacks Rank, Price Performance and Estimate Trend
Envela, with a $135.8-million market capitalization, currently carries a Zacks Rank #4 (Sell). The company has been grappling with rising operating costs and expenses. In the second quarter of 2023, its costs of goods sold increased 26.6% year over year to $39.5 million, with gross profit declining 6.1%. However, the company is poised to benefit from its solid product offerings, innovation efforts and inorganic activities.
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The company’s shares have lost 33.2% against the industry’s growth of 13.2% in the past three months.
In the past 60 days, the Zacks Consensus Estimate for the company’s earnings has moved down 9.3% to 29 cents for 2023 on one downward estimate revision against none upward. Over the same time frame, the consensus estimate for 2024 earnings inched down 2.3% to 43 cents on one downward estimate revision against none upward.
Key Picks
Some better-ranked stocks are Abercrombie & Fitch ANF, Boot Barn BOOT and Brilliant Earth Group, Inc. BRLT. While Abercrombie & Fitch and Boot Barn each sport a Zacks Rank #1 (Strong Buy), Brilliant Earth carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch is a leading casual apparel retailer. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 10.4% and 1,644%, respectively, from the year-ago reported figures. ANF delivered an earnings surprise of 724.8% in the last reported quarter.
Boot Barn is a fashion retailer of apparel and accessories. The company has a trailing four-quarter earnings surprise of 13.5%, on average. The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests growth of 7.8% from the year-ago reported figure.
Brilliant Earth is a designer and seller of precious metals and jewelry in the United States. BRLT has a trailing four-quarter earnings surprise of 83.3%, on average. The Zacks Consensus Estimate for Brilliant Earth’s current financial-year sales suggests growth of 9.2% from the year-ago reported figure.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
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