Overlooked Alpha

Overlooked Alpha

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Overlooked Alpha
Overlooked Alpha
Destination XL Looks Too Cheap

Destination XL Looks Too Cheap

At 3.35x EBITDA, DXLG stock can provide big (and tall) gains.

Joe | 3MB
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Overlooked Alpha
Jun 04, 2023
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Overlooked Alpha
Overlooked Alpha
Destination XL Looks Too Cheap
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Highlights:

  • ‘Big and tall’ retailer DXLG trades at a discount to the struggling apparel space. But the market has it backwards

  • Based on updated guidance for fiscal 2023, DXLG trades at 3.35x EBITDA. Timing of cash flows suggest the multiple is even lower.

  • That valuation suggests a discount to peers. Yet Destination XL has outperformed for years now, and its business model suggests room for that to continue.

  • In a blue-sky scenario, DXLG can quadruple. Reasonable expectations still create a path toward a multi-year double.

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