Also, comparably, DBGI has far less debt as a percentage of income, faster-growing revenues, and an impressive capital structure that provides substantial room for growth while maintaining a relatively low number of shares outstanding. Assuming dilution from its recent acquisition of Stateside of about 5M shares, DBGI should have roughly 17 million shares in the market. AKA has about 127M shares outstanding.
But, the side-by-side comparison is more compelling in DBGI's favor after noting the similar business model and what investors were willing to pay to be part of the AKA story.
Faster Growth In DBGI Brand Portfolio
Since August, DBGI has noted that DSTLD inventories are building to meet a considerable increase in demand. Moreover, its Bailey 44 brand is following suit, also seeing an acceleration of wholesale booking orders ahead of the Fall season. In fact, DBGI added in its quarterly update that Bailey 44 is nearing wholesale order levels that compare favorably to pre-COVID levels. Now, with Stateside added to the mix, the upcoming Fall season could be the fuse to ignite substantial company-wide growth.
Better still, DBGI expects more than posting higher revenues. They expect to turn EBITDA positive in 2022. Bottom line, earning only half the AKA multiple could send its valuation soaring. Also, with additional acquisitions expected, the story is far from complete on the asset front. Thus, valuing DBGI assets today could understate its value significantly over the next few months. Actually, the next few weeks could have investors staring down a higher and well-deserved valuation.
Know this, too. Taking an interest in DBGI at these levels also takes advantage of a "new' post-IPO Digital Brands Group. And emerging as the latter since Q2, DBGI is in its best position operationally and financially to drive shareholder value higher. Moreover, its capital structure remains ideal for acquisition, and the company's ability to structure deals on company-friendly terms is also a value driver in the weeks and quarters to come.
Thus, looking past the inherent strengths of DBGI is more than shortsighted. It leaves too much value unrecognized. But, to be fair, that's not all bad news. For investors paying attention, it exposes opportunities.
Therefore, taking advantage of an intrinsically undervalued DBGI may be a wise consideration ahead of expected acquisitions and surging brand sales. Indeed, heading into the tail end of Q4, much looks to be in play.
And with a tight float and low O/S counts, as history shows, the stock can fly on value-enhancing news. Thus, heading into the holiday sales season, DBGI stock is an excellent candidate to buy and hold. It is, after all, currently priced as a gift that can keep on giving.
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