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It might be of some concern to shareholders to see the Destination XL Group, Inc. (NASDAQ:DXLG) share price down 10% in the last month. But over the last three years the stock has shone bright like a diamond. Over that time, we've been excited to watch the share price climb an impressive 433%. Arguably, the recent fall is to be expected after such a strong rise. The only way to form a view of whether the current price is justified is to consider the merits of the business itself.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
Check out our latest analysis for Destination XL Group
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During three years of share price growth, Destination XL Group moved from a loss to profitability. Given the importance of this milestone, it's not overly surprising that the share price has increased strongly.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that Destination XL Group has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Destination XL Group stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's nice to see that Destination XL Group shareholders have received a total shareholder return of 15% over the last year. However, that falls short of the 24% TSR per annum it has made for shareholders, each year, over five years. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Destination XL Group (at least 2 which are potentially serious) , and understanding them should be part of your investment process.
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