Analyzing Gildan Activewear (NYSE:GIL) & Kontoor Brands (NYSE:KTB)

Kontoor Brands (NYSE:KTB) and Gildan Activewear (NYSE:GIL) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Dividends

Kontoor Brands pays an annual dividend of $2.12 per share and has a dividend yield of 3.5%. Gildan Activewear pays an annual dividend of $0.90 per share and has a dividend yield of 1.4%. Kontoor Brands pays out 54.6% of its earnings in the form of a dividend. Gildan Activewear pays out 28.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Kontoor Brands has raised its dividend for 1 consecutive years and Gildan Activewear has raised its dividend for 2 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Kontoor Brands and Gildan Activewear, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kontoor Brands	1	2	5	1	2.67
Gildan Activewear	0	3	12	0	2.80

Kontoor Brands currently has a consensus price target of $87.13, suggesting a potential upside of 42.13%. Gildan Activewear has a consensus price target of $77.08, suggesting a potential upside of 15.70%. Given Kontoor Brands’ higher probable upside, equities analysts plainly believe Kontoor Brands is more favorable than Gildan Activewear.

Earnings & Valuation

This table compares Kontoor Brands and Gildan Activewear”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kontoor Brands	$2.61 billion	1.31	$245.80 million	$3.88	15.80
Gildan Activewear	$3.27 billion	3.77	$400.86 million	$3.13	21.28

Gildan Activewear has higher revenue and earnings than Kontoor Brands. Kontoor Brands is trading at a lower price-to-earnings ratio than Gildan Activewear, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Kontoor Brands and Gildan Activewear’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kontoor Brands	7.68%	63.21%	13.16%
Gildan Activewear	14.13%	35.53%	13.06%

Volatility and Risk

Kontoor Brands has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, Gildan Activewear has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Institutional and Insider Ownership

93.1% of Kontoor Brands shares are held by institutional investors. Comparatively, 82.8% of Gildan Activewear shares are held by institutional investors. 1.7% of Kontoor Brands shares are held by insiders. Comparatively, 2.0% of Gildan Activewear shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Gildan Activewear beats Kontoor Brands on 10 of the 18 factors compared between the two stocks.

About Kontoor Brands

Kontoor Brands, Inc., a lifestyle apparel company, designs, produces, procures, markets, distributes, and licenses denim, apparel, footwear, and accessories, primarily under the Wrangler and Lee brands. The company operates through two segments: Wrangler and Lee. It licenses and sells apparel under the Rock & Republic brand name. The company sells its products primarily through mass merchants, specialty stores, mid-tier and traditional department stores, company-operated stores, and online. It operates in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific regions. Kontoor Brands, Inc. was incorporated in 2018 and is headquartered in Greensboro, North Carolina.

About Gildan Activewear

Gildan Activewear Inc. manufactures and sells various apparel products in the United States, North America, Europe, Asia-Pacific, and Latin America. It provides various activewear products, including T-shirts, fleece tops and bottoms, and sports shirts under the Gildan, Gildan Performance, Gildan Hammer, Glidan Softstyle, Gildan Heavy Cotton, Gildan Ultra Cotton, Gildan DryBlend, Gildan HeavyBlend, Comfort Colors, and American Apparel brands. The company also offers hosiery products comprising athletic; dress; and casual, liner, therapeutic, and workwear socks under the Gildan, Under Armour, GoldToe, Signature Gold by Goldtoe, Peds, MediPeds, All Pro, and GoldTeo Edition TM brands. In addition, it provides men's and boys' underwear products, and ladies panties under the Gildan and Gildan Platinum brands. The company sells its products to wholesale distributors, screen printers, and embellishers, as well as to retailers and lifestyle brand companies. The company was formerly known as Textiles Gildan Inc. and changed its name to Gildan Activewear Inc. in March 1995. Gildan Activewear Inc. was founded in 1946 and is headquartered in Montreal, Canada.