Destination XL Looks Too Cheap

and

Jun 04, 2023

∙ Paid

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.