Delta Apparel (DLA)

(Image: Zen Buddha Silence, by Marilyn Barbone)

September 6, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

AdvanSix, Inc. (ASIX):

Universal Technical Institute (UTI):

Burnham Holdings Inc (BURCA):

Select Interior Concepts (SIC):

Manitowoc (MTW):

Ciner Resources LP (CINR):

Global Ship Lease (GSL):

Alico, Inc. (ALCO):

Genco Shipping (GNK):


Tidewater (TDW):

TravelCenters of America (TA):

Teekay Tankers (TNK):

Ranger Energy Services (RNGR):

Macro Enterprises (Canada: MCR.V):

This week, we are going to look at Delta Apparel, Inc. (DLA).  Here’ a description from the company’s website:

“Delta Apparel, Inc., along with its operating subsidiaries…is a vertically-integrated, international apparel company that designs, manufactures, sources, and markets a diverse portfolio of core activewear and lifestyle apparel products. The Company is a market leader in the direct-to-garment digital print and fulfillment industry, bringing DTG2Go technology and innovation to the supply chain of its customers. The Company specializes in selling casual and athletic products through a variety of distribution channels and tiers, including outdoor and sporting goods retailers, independent and specialty stores, better department stores and mid-tier retailers, mass merchants and e-retailers, the U.S. military, and through its business-to-business e-commerce sites. The Company’s products are also made available direct-to-consumer on its websites…as well as through its branded retail stores.”

DLA has a market cap of $102 million, with net debt of $141 million and an enterprise value of $243 million.  (The company has $14.5 million in cash.)


Step One

First we screen for cheapness based on five metrics.  Here are the numbers for Delta Apparel:

    • EV/EBITDA = 4.41
    • P/E = 7.38
    • P/B = 0.76
    • P/CF = 1.85
    • P/S = 0.28

(Normalized EBITDA is approximately $55 million, while normalized earnings is about $2.00 per share.)

Step Two

Next we calculate the Piotroski F-Score, which is a measure of the fundamental strength of the company.  For more on the Piostroski F-Score, see my blog post here:

DLA has a Piotroski F-Score of 5.  (The best score possible is 9, while the worst score is 0.)  This is mediocre, but not bad.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA).  DLA has TL/TA of 67%, which is decent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders.  At DLA, insider ownership is approximately 10%.  This is good.

Shareholder yield is the dividend yield plus the buyback yield.  At Delta Apparel, dividend yield is zero.  The buyback yield is also zero.  Thus, shareholder yield is zero.

Each component of the ranking has a different weight.  The overall combined ranking of Delta Apparel places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

The final step is to study the company’s financial statements, presentations, and quarterly conference calls to (i) check for non-recurring items,  hidden liabilities, and bad accounting; (ii) estimate intrinsic value—how much the business is worth—using scenarios for low, mid, and high cases.

The company’s latest 10-K for the year ended October 3, 2020:

See also Delta Apparel’s investor presentation:

Finally, check out the following:

(To access the link to, you may have to create a guest membership, which is free.)

Intrinsic value scenarios:

    • Low case: EBITDA may be $40 million on the low end.  DLA is probably worth at least 6x EV/EBITDA.  That translates to $14.38 a share, which is 2.5% lower than today’s $14.75.
    • Mid case: Normalized EBITDA is approximately $55 million.  DLA is likely worth at least 6x EV/EBITDA.  That translates to $39.86 per share, 170% higher than today’s $14.75.
    • High case: Normalized EBITDA is at least $55 million.  DLA may easily be worth 8x EV/EBITDA.  That translates to $63.81, which is over 300% higher than today’s $14.75.



An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.  See the historical chart here:

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio.  The size of each position is determined by its rank.  Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost).  Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods.  We also aim to outpace the Russell Microcap Index by at least 2% per year (net).  The Boole Fund has low fees.


If you are interested in finding out more, please e-mail me or leave a comment.

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Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.