Argus Research Initiates Equity Research Report Coverage on Envela Corp. (NYSE American: ELA)
January 23 2020 - 9:02AM
Argus Research, an independent investment research firm, has
launched Equity Research Report coverage on Envela Corp. (NYSE
American: ELA)
Click here to view Full Argus
Report
Highlights, as conveyed by Argus Analyst Steve Silver,
include:
COMPANY HIGHLIGHTS
- Pushing the Envelope on Recommerce.
- In our view, Envela is uniquely positioned for continued
growth. The company has undergone a successful turnaround that saw
it reestablish profitability in its core retail business as a
marketplace for authenticated consignment luxury items, including
fine jewelry and watches. In 2019, the company diversified into
electronics recycling through the asset acquisitions of Echo
Environmental and ITAD USA, and the purchase of Teladvance. This
led to the formation of a new business unit that has made solid
traction among large corporate clients and significantly enhanced
Envela’s gross margin profile.
- We expect Envela to diversify revenue streams further by
acquiring other cash-generating companies across the recommerce
landscape, utilizing roughly $40 million of net operating loss
carryforwards from prior leadership.
- As of September 30, 2019, the company had $2.2 million in
cash/restricted cash and marketable securities and $9.4 million in
long-term debt, most of which is tied to a promissory note to CEO
John Loftus, which enabled the Echo and ITAD acquisitions. Driven
by improving fundamentals, we expect Envela to retain sufficient
working capital to invest in and expand its corporate
footprint.
- We think that Envela shares are extremely undervalued, on both
a price/sales and price/ earnings basis, and we expect the
valuation gap compared with relevant benchmarks to converge in the
coming years. Based on our forward P/E analysis, we arrive at a
fair value estimate of $4 per
share.
INVESTMENT THESIS (partial excerpts below:
click here to view the full Argus Report)
Envela Corp. is an emerging leader in the recommerce industry.
The company was established in 1965 as American Pacific Mine and
later renamed Dallas Gold & Silver. Exchange, before rebranding
as Envela in December 2019. It has a more than 40-year commitment
to being eco-friendly, and its current business model promotes
reducing, reusing and recycling goods by extending the useful life
of consumer products. Envela provides a marketplace for an enhanced
buying experience of jewelry and bullion, specializing in luxury
watches and jewels. It is supported by an in-house staff of
experts, including horologists, gemologists and authenticators who
inspect items for authenticity and value. The company hosts an
on-site, state-of-the-art Swiss watch repair service with dedicated
watch craftsmen who have trained at the esteemed American
Watchmakers-Clockmakers Institute (AWCI), testing and servicing
fine mechanical timepieces to ensure they operate at optimum
levels. Envela’s Bullion Express unit is one of the largest
precious metals dealers in the southwest United States, offering a
wide selection of gold, silver, platinum and palladium coins, bars,
bullion rounds, collectibles and other numismatics products from
mints around the world. Its inventory includes over 250 bullion
products, including American Eagles, Canadian Maple Leafs, South
African Krugerrands, and Credit Suisse gold bars and kilo silver
bars.
About Envela Corp. (NYSE American:
ELA) www.dgse.com
Envela, together with its subsidiaries, buys and sells jewelry
and bullion products to individual consumers, dealers and
institutions in the United States. As of December 31, 2018, the
company marketed its products and services through five retail
locations, as well as several e-commerce sites. In 2019, the
company acquired Echo Environmental, ITAD USA and Teladvance to
expand its portfolio into areas of electronic recommerce. The
company was known previously as DGSE Companies, Inc. and became
Envela Corporation in December 2019. The company was founded in
1965 and is based in Dallas, Texas.
ELA Investor Relations Contact:
David VadalaHead of Investor RelationsEnvela Corporation13022
Preston Rd Dallas, TX 75240972.587.4030
About Argus Research Corp. Headquartered in
NYC, Argus Research (www.argusresearch.com) is a leading
independent equity research firm (est. 1934) ̶
providing fundamental and quantitative research coverage on
more than 1,500 companies across all 11 sectors of the S&P 500,
as well as macroeconomic and equity market forecasts, thematic
research, model portfolios and pre-IPO research. In addition,
Argus has recently committed to providing a sponsored research
solution for small & mid-cap companies seeking coverage.
Our Asset Management, Bank Trust, sell-side advisor and
self-directed investor clients value Argus’s proprietary equity
research methodology, analysis and commentary. Argus’s Equity
Research/earnings estimates are available on major research /
earnings estimate aggregator platforms, including Bloomberg,
Thomson Reuters, Factset and S&P Global.
For more Information, contact: Darrell
Stone646-747-5438dstone@argusresearch.com
Argus Research Co. has received a flat fee from the company
discussed in this report as part of a Sponsored Research agreement
between Argus and the company. No part of Argus Research’s
compensation is directly or indirectly related to the content of
this assessment or to other opinions expressed in this report.
Please refer to the full Argus report and the disclaimer for
complete disclosures.