Destination XL Looks Too Cheap

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

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.