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E Land Buying K-Swiss Footwear After Sales Stumble

 Chart data by YCharts

The company's balance sheet has often appeared to be quite attractive, with relatively large amounts of cash, and little or no debt, but as the losses mounted, the cash dwindled, ending the latest quarter at about $40 million. Still, that means that E Land is effectively getting K-Swiss for about $130 million or $3.65 per share if you back out the cash. The deal also prices K-Swiss at a relatively low 1.55 times net current asset value.

Interestingly, K-Swiss' latest quarterly earnings report showed one of the most narrow losses, $1.9 million, or five cents per share, that the company has had in years. The loss was well below consensus estimates ( a loss of 13 cents per share), although that consensus is comprised of just 2 analysts. It's difficult to conclude that its narrower quarterly loss was a sign of better days ahead, as revenue was down 16% versus the same quarter last year.

Of course, there are some not at all happy with this deal, and several law firm investigations of K-Swiss, as it relates to the E Land deal were hitting the newswires on Friday.

So it goes in "value" land.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.

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