Destination Story

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DXLG -- USA Stock  

USD 0.24  0.01  4.35%

Destination XL Group is scheduled to announce its earnings today. The stock experiences above-average trading activities. While many fundamental traders are getting carried away by overanalyzing balance sheets and income statements, it is reasonable to digest Destination XL Group against its basic efficiency ratios. We will analyze why it could be a much better year for Destination shareholders. Destination XL Group probability of distress is under 31 percent. Will Destination shareholders continue to pick up in September?
Published over a month ago
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Does Destination (NASDAQ:DXLG) have sound forward indicators based on the latest surge?
Destination appears to be extremely dangerous, given 1 month investment horizon. Destination XL Group secures Sharpe Ratio (or Efficiency) of 0.0552, which denotes the company had 0.0552% of return per unit of risk over the last month. Our standpoint towards predicting the volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. By reviewing Destination XL Group technical indicators you can presently evaluate if the expected return of 0.66% is justified by implied risk. Please utilize Destination XL Group mean deviation of 5.93, and Coefficient Of Variation of (6,931) to check if our risk estimates are consistent with your expectations.
Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Destination income statement, its balance sheet, and the statement of cash flows. Potential Destination investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Destination investors may use each financial statement separately, they are all related. The changes in Destination's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Destination's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages. The goal of Destination fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Destination performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Destination shares is the value that is considered the true value of the share. If the intrinsic value Destination is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Destination. Please read more on our fundamental analysis page.

Watch out for price decline

Please consider monitoring Destination on a daily bases if you are holding a position in it. Destination is trading at a penny-stock level, and the possibility of delisting is much higher compared to other equities. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Destination stock to be traded above the $1 level to remain listed. If Destination stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.

How important is Destination's Liquidity

Destination financial leverage refers to using borrowed capital as a funding source to finance Destination XL Group ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Destination financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Destination's total debt and its cash.

How Destination utilizes its cash?

To perform a cash flow analysis of Destination, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Destination is receiving and how much cash it distributes out in a given period. The Destination cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Destination Net Cash Flow from Operations is projected to decrease significantly based on the last few years of reporting. The past year's Net Cash Flow from Operations was at 15.8 Million

Destination Gross Profit

Destination Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Destination previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Destination Gross Profit growth over the last 10 years. Please check Gross Profit in more details.

Breaking down the case for Destination

Although in the United States, the Securities and Exchange Commission has enforced strong rules to prevent insiders from engaging in insider trading, finding insiders among active shareholders of Destination is not uncomon. Institutional investors typically avoid acquiring a high percentage of Destination stocks because performing such an act may violate securities laws. They are usually not investing their own money, but rather making investments on behalf of their clients. Let's take a look at how the ownership of Destination is distributed among investors.

Ownership Allocation

Destination XL Group retains a total of 51.08 Million outstanding shares. Over half of Destination XL Group outstanding shares are owned by other corporate entities. These other corporate entities are typically referred to corporate investors that obtain positions in a given instrument to benefit from reduced trade commissions. Consequently, these institutions are subject to different rules and regulation than regular investors in Destination. Please watch out for any change in the institutional holdings of Destination XL Group as this could mean something significant has changed or about to change at the company. Remember, it does not matter who owns the company or if the company is currently losing money. If the true value of the company is more than the market pays for it currently, you can still have a good investment opportunity.

Retail Investors
14.32%
Insiders
15.84%
Institutions
69.84%
Retail Investors14.32
Insiders15.84
Institutions69.84

Asset Utilization

The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Destination has an asset utilization ratio of 460.16 percent. This indicates that the company is making $4.6 for each dollar of assets. An increasing asset utilization means that Destination XL Group is more efficient with each dollar of assets it utilizes for everyday operations.

Current Assets
140.5 M
Assets Non Current
209.6 M
Current Assets140.54 Million35.79
Assets Non Current209.6 Million53.38
Goodwill2.01 Million0.51
Tax Assets40.54 Million10.32

Will Destination latest surge continue?

Treynor ratio is down to 8.86. It may indicate a possible volatility dip. Destination XL Group is displaying above-average volatility over the selected time horizon. Investors should scrutinize Destination XL Group independently to ensure intended market timing strategies are aligned with expectations about Destination volatility. Destination XL Group is a potential penny stock. Although Destination may be in fact a good instrument to invest, many penny stocks are speculative in nature and are subject to artificial price hype. Please make sure you totally understand the upside potential and downside risk of investing in Destination XL Group. We encourage investors to look for the signals such us email spams, message board hypes, claims of breakthroughs, volume upswings, sudden news releases, promotions that are not reported, or demotions released before SEC filings. Please also check biographies and work history of current and past company officers before investing in high volatility instruments, penny stocks, or equities with microcap classification. You can indeed make money on this equity instrument if you perfectly time your entry and exit. However, remember that penny stocks that have been the subject of an artificial hype usually unable to maintain its increased share price for more than just a few days. The price of a promoted high volatility instrument will almost always revert back. The only way to increase shareholder value is through legitimate performance backed up by solid fundamentals.

Our Conclusion on Destination

Although other entities under the apparel retail industry are still a bit expensive, Destination may offer a potential longer-term growth to shareholders. Taking everything into account, as of the 27th of August 2020, our analysis shows that Destination hyperactively responds to market trends. The firm is undervalued and projects below average probability of bankruptcy for the next 2 years. However, our concluding 30 days 'Buy-Sell' recommendation on the firm is Strong Sell.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Destination XL Group. Please refer to our Terms of Use for any information regarding our disclosure principles.

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