K Swiss (NASDAQ: KSWS) and Hanesbrands (NYSE:HBI) are both cyclical consumer goods & services companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, profitability, valuation, analyst recommendations, dividends and institutional ownership.

Dividends

Hanesbrands pays an annual dividend of $0.60 per share and has a dividend yield of 2.8%. K Swiss does not pay a dividend. Hanesbrands pays out 37.0% of its earnings in the form of a dividend. Hanesbrands has raised its dividend for 3 consecutive years.

Profitability

This table compares K Swiss and Hanesbrands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
K Swiss N/A N/A N/A
Hanesbrands 9.43% 64.73% 10.21%

Analyst Ratings

This is a summary of current recommendations for K Swiss and Hanesbrands, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
K Swiss 0 0 0 0 N/A
Hanesbrands 0 8 8 0 2.50

Hanesbrands has a consensus target price of $26.00, suggesting a potential upside of 21.95%. Given Hanesbrands’ higher possible upside, analysts plainly believe Hanesbrands is more favorable than K Swiss.

Earnings & Valuation

This table compares K Swiss and Hanesbrands’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
K Swiss N/A N/A N/A ($0.98) -4.84
Hanesbrands $6.03 billion 1.29 $539.38 million $1.62 13.16

Hanesbrands has higher revenue and earnings than K Swiss. K Swiss is trading at a lower price-to-earnings ratio than Hanesbrands, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

96.9% of Hanesbrands shares are held by institutional investors. 1.1% of Hanesbrands shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

K Swiss has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500. Comparatively, Hanesbrands has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Summary

Hanesbrands beats K Swiss on 11 of the 13 factors compared between the two stocks.

About K Swiss

K-Swiss Inc. (K-Swiss) is engaged in designing, developing and marketing an array of footwear, apparel and accessories for athletic, sports and fitness activities and casual wear under the K-Swiss brand. The Company also designs, develops and markets footwear for adventurers for all terrains under the Palladium brand. The Company sells products primarily to footwear stores, pro shops, sporting goods stores and department stores. Internationally, as of December 31, 2011, K-Swiss had the right to market its products in 124 countries through eight international subsidiaries and 29 distributors. During the year ended December 31, 2011, approximately 60%, 21%, 17% and 2% of the Company’s footwear products were manufactured in China, Thailand, Vietnam and Indonesia, respectively. In May 2013, E.Land World Ltd. completed the acquisition of K Swiss Inc in a merger transaction.

About Hanesbrands

Hanesbrands Inc. is a marketer of basic innerwear and activewear apparel in the Americas, Europe, Australia and Asia/Pacific under apparel brands, such as Hanes, Champion, Maidenform, DIM, Bali, Playtex, Bonds, JMS/Just My Size, Nur Die/Nur Der, L’eggs, Lovable, Wonderbra, Flexees, Gear for Sports and Berlei. The Company operates through four segments: Innerwear, Activewear, Direct to Consumer and International. The Innerwear segment focuses on core apparel products, such as intimate apparel, men’s underwear, women’s panties, children’s underwear, socks and hosiery. The Company operates in the activewear market through its Champion, Hanes and JMS/Just My Size brands. The Direct to Consumer segment operations include its domestic Company-operated outlet stores and Website operations that sell its branded products directly to consumers in the United States. The International segment includes products that primarily span across the innerwear and activewear segments.

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