Intrinsic value of Destination XL Group, Inc. - DXLG

Previous Close

$1.88

  Intrinsic Value

$1.46

stock screener

  Rating & Target

sell

-22%

Previous close

$1.88

 
Intrinsic value

$1.46

 
Up/down potential

-22%

 
Rating

sell

We calculate the intrinsic value of DXLG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
Revenue, $m
  483
  499
  517
  536
  557
  578
  602
  627
  653
  681
  711
  743
  776
  811
  848
  888
  929
  973
  1,019
  1,067
  1,118
  1,172
  1,229
  1,288
  1,351
  1,416
  1,486
  1,558
  1,635
  1,715
Variable operating expenses, $m
  482
  498
  515
  533
  553
  575
  597
  622
  648
  675
  693
  724
  756
  790
  827
  865
  905
  948
  993
  1,040
  1,090
  1,142
  1,197
  1,255
  1,316
  1,380
  1,447
  1,518
  1,593
  1,671
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  482
  498
  515
  533
  553
  575
  597
  622
  648
  675
  693
  724
  756
  790
  827
  865
  905
  948
  993
  1,040
  1,090
  1,142
  1,197
  1,255
  1,316
  1,380
  1,447
  1,518
  1,593
  1,671
Operating income, $m
  1
  2
  2
  3
  3
  4
  4
  5
  6
  6
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
EBITDA, $m
  36
  37
  38
  39
  41
  43
  44
  46
  48
  50
  52
  55
  57
  60
  62
  65
  68
  72
  75
  78
  82
  86
  90
  95
  99
  104
  109
  115
  120
  126
Interest expense (income), $m
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  26
  27
Earnings before tax, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  11
  11
  11
  11
  11
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  16
  16
  16
  17
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
Net income, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  12

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  248
  256
  266
  275
  286
  297
  309
  322
  335
  350
  365
  381
  399
  417
  436
  456
  477
  500
  523
  548
  574
  602
  631
  662
  694
  727
  763
  800
  840
  881
Adjusted assets (=assets-cash), $m
  248
  256
  266
  275
  286
  297
  309
  322
  335
  350
  365
  381
  399
  417
  436
  456
  477
  500
  523
  548
  574
  602
  631
  662
  694
  727
  763
  800
  840
  881
Revenue / Adjusted assets
  1.948
  1.949
  1.944
  1.949
  1.948
  1.946
  1.948
  1.947
  1.949
  1.946
  1.948
  1.950
  1.945
  1.945
  1.945
  1.947
  1.948
  1.946
  1.948
  1.947
  1.948
  1.947
  1.948
  1.946
  1.947
  1.948
  1.948
  1.948
  1.946
  1.947
Average production assets, $m
  115
  119
  124
  128
  133
  138
  144
  150
  156
  163
  170
  177
  185
  194
  203
  212
  222
  233
  244
  255
  267
  280
  294
  308
  323
  339
  355
  372
  391
  410
Working capital, $m
  57
  59
  61
  63
  66
  68
  71
  74
  77
  80
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  167
  175
  184
  193
  202
Total debt, $m
  65
  71
  77
  84
  92
  100
  108
  117
  127
  137
  148
  159
  172
  184
  198
  212
  227
  243
  260
  278
  296
  316
  336
  358
  381
  405
  430
  456
  484
  514
Total liabilities, $m
  176
  182
  188
  195
  203
  211
  219
  228
  238
  248
  259
  270
  283
  295
  309
  323
  338
  354
  371
  389
  407
  427
  447
  469
  492
  516
  541
  567
  595
  625
Total equity, $m
  72
  75
  77
  80
  83
  86
  90
  94
  98
  102
  106
  111
  116
  121
  127
  133
  139
  145
  152
  160
  167
  175
  184
  193
  202
  212
  222
  233
  244
  256
Total liabilities and equity, $m
  248
  257
  265
  275
  286
  297
  309
  322
  336
  350
  365
  381
  399
  416
  436
  456
  477
  499
  523
  549
  574
  602
  631
  662
  694
  728
  763
  800
  839
  881
Debt-to-equity ratio
  0.900
  0.950
  1.000
  1.050
  1.100
  1.150
  1.200
  1.250
  1.300
  1.350
  1.390
  1.440
  1.480
  1.520
  1.560
  1.600
  1.640
  1.670
  1.710
  1.740
  1.770
  1.800
  1.830
  1.860
  1.890
  1.910
  1.940
  1.960
  1.980
  2.000
Adjusted equity ratio
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  12
Depreciation, amort., depletion, $m
  34
  35
  36
  37
  38
  39
  40
  41
  42
  44
  34
  35
  37
  39
  41
  42
  44
  47
  49
  51
  53
  56
  59
  62
  65
  68
  71
  74
  78
  82
Funds from operations, $m
  32
  33
  34
  35
  36
  37
  39
  40
  41
  43
  42
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
Change in working capital, $m
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
Cash from operations, $m
  30
  31
  32
  33
  34
  35
  36
  37
  38
  40
  38
  40
  41
  43
  45
  46
  48
  50
  52
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
Maintenance CAPEX, $m
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -39
  -41
  -42
  -44
  -47
  -49
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
New CAPEX, $m
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
Cash from investing activities, $m
  -25
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -40
  -42
  -43
  -45
  -48
  -50
  -52
  -54
  -58
  -61
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -88
  -92
  -97
Free cash flow, $m
  5
  4
  4
  4
  3
  3
  3
  2
  2
  2
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -12
Issuance/(repayment) of debt, $m
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
Issuance/(repurchase) of shares, $m
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  9
  10
  10
  11
  12
  13
  14
  14
  15
  15
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
Total cash flow (excl. dividends), $m
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
Retained Cash Flow (-), $m
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  10
  10
  10
  11
  11
  11
  11
  11
  12
  12
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
  5
Discount rate, %
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
  10
  9
  9
  8
  8
  8
  7
  7
  6
  6
  2
  2
  2
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  95.7
  91.5
  87.6
  84.0
  80.5
  77.3
  74.2
  71.4
  68.7
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2
  66.2

Destination XL Group, Inc. is a specialty retailer of men's apparel with retail and direct operations in the United States and London, England. The Company operates through the Big & Tall Men's Apparel segment. The Company operates under the trade names of Destination XL, DXL, Casual Male XL, Casual Male XL outlets, DXL outlets, Rochester Clothing, ShoesXL and LivingXL. The Company operates approximately 170 Destination XL stores, 125 Casual Male XL retail stores, 40 Casual Male XL outlet stores, nine DXL outlet stores and five Rochester Clothing stores. Its direct business includes its DestinationXL.com and bigandtall.com e-commerce sites, which support its stores, brands and product extensions. Through its multiple brands, which include both branded apparel and private-label, the Company offers a range of merchandise. The Company carries various designer brands, including Cole Haan, Allen Edmonds, Timberland, Calvin Klein, Lacoste, Donald J. Pliner and Bruno Magli.

FINANCIAL RATIOS  of  Destination XL Group, Inc. (DXLG)

Valuation Ratios
P/E Ratio -47.7
Price to Sales 0.2
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 2.7
Price to Free Cash Flow 15.9
Growth Rates
Sales Growth Rate 1.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -12.1%
Cap. Spend. - 3 Yr. Gr. Rate -11.7%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 13.5%
Total Debt to Equity 70.8%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.4%
Ret/ On Assets - 3 Yr. Avg. -1.7%
Return On Total Capital -1.3%
Ret/ On T. Cap. - 3 Yr. Avg. -5.1%
Return On Equity -2.3%
Return On Equity - 3 Yr. Avg. -7.8%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 45.6%
Gross Margin - 3 Yr. Avg. 45.9%
EBITDA Margin 7.1%
EBITDA Margin - 3 Yr. Avg. 5.4%
Operating Margin 0.2%
Oper. Margin - 3 Yr. Avg. -1%
Pre-Tax Margin -0.4%
Pre-Tax Margin - 3 Yr. Avg. -1.6%
Net Profit Margin -0.4%
Net Profit Margin - 3 Yr. Avg. -1.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

DXLG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DXLG stock intrinsic value calculation we used $468 million for the last fiscal year's total revenue generated by Destination XL Group, Inc.. The default revenue input number comes from 0001 income statement of Destination XL Group, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DXLG stock valuation model: a) initial revenue growth rate of 3.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.8%, whose default value for DXLG is calculated based on our internal credit rating of Destination XL Group, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Destination XL Group, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DXLG stock the variable cost ratio is equal to 99.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for DXLG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.6% for Destination XL Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Destination XL Group, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DXLG stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DXLG are equal to 23.9%.

Life of production assets of 3.6 years is the average useful life of capital assets used in Destination XL Group, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DXLG is equal to 11.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $69.986 million for Destination XL Group, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 49.480 million for Destination XL Group, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Destination XL Group, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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