Company Overview
Digital Brands Group, Inc. operates within the consumer cyclical sector, specifically targeting the apparel retail industry by providing a range of apparel products through both direct-to-consumer channels and wholesale distribution networks. The company's product portfolio includes women's clothing such as dresses, tops, jumpsuits, sets, shirts, sweaters, skirts, shorts, athleisure bottoms, and various accessory items designed for diverse consumer needs. As a publicly traded entity with the ticker symbol DBGI, the company currently holds a market capitalization of $14.17M and employs a workforce of 41 individuals to support its operations. The combination of a $14.17M market cap and annual revenue of $7.92M indicates that the company operates on a micro-cap scale, reflecting a small market presence relative to larger apparel retailers and suggesting limited diversification within its specific industry vertical.
Financial Health
The company reports a trailing twelve-month revenue of $7.92M, yet this top-line figure masks a significant underlying financial distress as the net income for the same period stands at -$13,030,859, while EBITDA is recorded at -$9,750,095. The substantial gap between the positive revenue of $7.92M and the deeply negative net income reveals a highly fragile cost structure where operating expenses and other deductions far exceed gross profits. Free cash flow for the trailing twelve months is -$7,591,772, which indicates a lack of financial flexibility as the company is consuming its cash reserves rather than generating new capital from operations. Margins further illustrate this operational pressure, with a gross margin of 19.4% being eroded by an operating margin of -201.3% and a profit margin of -164.6%. On the balance sheet, the company holds $6.70M in cash against $6.40M in debt, resulting in a debt-to-equity ratio of 40.00, which suggests a leveraged position where debt obligations are significant relative to equity. However, liquidity remains constrained with a current ratio of 0.81, indicating that current assets are insufficient to cover current liabilities without additional financing or asset liquidation. Furthermore, return on equity is -162.8% and return on assets is -22.2%, metrics that reveal management is currently generating value that detracts from shareholder equity and utilizes assets inefficiently to produce profits.
Valuation Assessment
Valuation metrics for Digital Brands Group, Inc. present a complex picture given the company's financial performance, with a trailing P/E ratio of 0.02 and a forward P/E of N/A. The discrepancy between the near-zero trailing P/E and the unavailable forward P/E implies that traditional earnings-based valuation methods are currently inapplicable due to the lack of positive earnings, rendering future earnings trajectory estimates impossible to quantify using standard multiples. The price-to-book ratio stands at 0.62, indicating that the market values the company's equity at a significant discount to its book value, which often occurs when investors price in potential distress or asset liquidation scenarios. Alternative valuation measures such as the price-to-sales ratio of 1.79 and an EV/EBITDA of -1.09 suggest that the market is pricing the stock based on sales rather than profitability, while the negative EV/EBITDA confirms that enterprise value is driven by negative operating cash generation. The stock has exhibited extreme volatility over the last year, trading between a 52-week high of $18.00 and a 52-week low of $1.70. Based on the provided data points, the current price is positioned significantly below the 52-week high of $18.00, reflecting a substantial correction from its recent peak levels. The beta of 0.38 indicates that the stock's price volatility is considerably lower than the broader market, suggesting it moves less than the average equity security in response to general market fluctuations.
Growth & Income
Growth metrics highlight a contraction in business activity, with revenue growth year-over-year declining by 32.2% and earnings growth year-over-year listed as N/A due to the negative earnings baseline. The absence of positive earnings growth relative to revenue decline reinforces the company's current trajectory of shrinking profitability and top-line revenue rather than expansion. As the company does not distribute dividends, the dividend yield is N/A and the payout ratio is 0.0%, meaning the firm retains all of its limited cash flow for operational survival rather than returning capital to shareholders. This non-dividend status combined with negative free cash flow indicates that the company is prioritizing internal retention of capital over income generation for investors. The overall growth and income profile is characterized by a contractionary trend with no current income distribution, relying entirely on the management of existing cash reserves to navigate the challenging financial environment.