Digital Brands Group

INVESTMENT HIGHLIGHTS

Stock Information

Price as of 10/27/21 $3.05
52 Wk High – Low $2.56 – $8.80
Est. Shares Outstanding 11.4m
Market Capitalization $37.05M
Average Volume 2.33m
Exchange: NASDAQ

Digital Brands Group, Inc. is a digitally-focused brands apparel company. Its June IPO allows for DBGI to continue its aggressive pace of brand acquisitions. They currently own bailey44, ACE Studio, Harper & Jones, and DSTLD apparel brands.

Near-Term Catalysts

  • Acquired Stateside Apparel in September
  • Aggressive acquisition and roll-up campaign targeting innovative brands. Guidance raised to between $37.4M – $42,5M
  • Produced record-setting growth in its recent Q1 filing
  • Guidance is for triple-digit percentage growth in during next two fiscal quarters
  • has ample cash and an impressive share structure with only 11.32 million S/O.
  • Acquisition strategy expanded to expand into additional consumer markets
  • No debt
  • Minimal Dilution for acquisition structure
  • Roll-up strategy to include additional retail business opportunities

DGBI Snapshot

DBGI is positioning itself to be a leading player in the shift from traditional retail. And while small compared to brick and mortar competitors like Macy’s (NYSE: M), the clear advantage of DBGI revenues is that they contribute to a business model designed to be profitable from the start. Most brick-and-mortar companies can’t make the same claim. And some are shedding assets to stay alive.

Competitive Analysis

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DBGI’s digitally-focused sales model intends to maximize every dollar of revenue earned. They can do that by streamlining their sales channels and controlling the manufacturing process from sourcing to end-sale. Thus, every dollar in sales has substantially more impact than traditional apparel retailers with very slim operating margins.

Moreover, DBGI is already positioning itself to be a leading player in the shift from traditional retail. And while small compared to brick and mortar competitors like Macy’s (NYSE: M), the clear advantage of DBGI revenues is that they contribute to a business model designed to be profitable from the start. Most brick-and-mortar companies can’t make the same claim. Some are shedding assets to stay alive.

For example, Naked Brands (NASDAQ: NAKD) recently announced its divestiture of Bendon Ltd. to rid itself of the costs related to operating a retail store location. Bendon, by the way, is no small company. But despite its massive sales, it had $56 million in accumulated operating losses since 2017. It shows that not all revenues are created equal. Also, with its traditional sales model apparently a drag on NAKD, they dumped it.

Catalyst Watch

DBGI has made it to the catalyst watch list, with its value proposition attractive when taking a sum total of its parts. Using apparel industry multiples for revenues and EBITDA, which value at nearly 10X and 12X, respectively, DBGI’s looks substantially undervalued. Combining DBGI’s known sales with its guidance, a more accurate share price could be near the $9.00 mark. That level does not include potential revenues from its planned acquisition of Stateside apparel, which is expected to add at least $5 million to yearly sales.

Also, current prices appear to significantly undervalue its asset-based intrinsic value, with DBGI already guiding revenues from Harper & Jones, Bailey 44, and DSTLD to increase in the back half of 2021. An extensive marketing campaign, a strengthened balance sheet, and its integration into Amazon Marketplace should fuel growth in those brands in Q3 and Q4.

 

Further, coming off its successful IPO last quarter, DBGI has tools in its arsenal to drive top-line growth. The low O/S count of about 11.3 million shares also positions DBGI for growth without much long-term dilutive effect. Incoming revenues will also offset expenses associated with brand development and market penetration into the fall season. Thus, on a post-IPO basis, and considering strategic acquisitions completed or about to be, DBGI stock and its are positioned for substantial growth in the current and coming quarters.

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In The News

In The News Digital Brands Group, Inc.'s Shares Jump 16% Intraday Thursday; Planned Stateside Acquisition In Focus (NasdaqGS: DBGI) DIGITAL BRANDS GROUP

DIGITAL BRANDS GROUP, INC.’S SHARES JUMP 16% INTRADAY THURSDAY; PLANNED STATESIDE ACQUISITION IN FOCUS (NASDAQGS: DBGI)

Digital Brands Group, Inc. (NASDAQ: DBGI) shares are soaring on Thursday to $5.85 intraday as investors appear to be…
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DIGITAL BRANDS GROUP, INC.'S

DIGITAL BRANDS GROUP, INC.’S VALUATION EXPECTED TO SURGE AS PLANNED ACQUISITION OF STATESIDE APPAREL NEARS (NASDAQGS: DBGI)

Although Digital Brands Group, Inc. (NasdaqGS: DBGI) stock is giving back part of its 76% June run, a consensus…
Read More
DIGITAL BRANDS GROUP, INC.'

DIGITAL BRANDS GROUP, INC.’S Q1 HELPS SET UP AN EXPECTED SURGE IN 2H 2021 (NASDAQGS: DBGI)

Digital Brands Group, Inc. (NasdaqGS: DBGI) CEO Hil Davis made a point of telling investors after posting Q1 results…
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Big Picture Opportunity

Multiple near-term catalysts. Acquisition imminent. Share price presents a compelling value proposition.
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