Superior Group of Companies (NASDAQ:SGC) vs. Kontoor Brands (NYSE:KTB) Critical Review

Kontoor Brands (NYSE:KTB) and Superior Group of Companies (NASDAQ:SGC) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Dividends

Kontoor Brands pays an annual dividend of $2.12 per share and has a dividend yield of 3.2%. Superior Group of Companies pays an annual dividend of $0.56 per share and has a dividend yield of 5.6%. Kontoor Brands pays out 54.6% of its earnings in the form of a dividend. Superior Group of Companies pays out 155.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kontoor Brands has increased its dividend for 1 consecutive years.

Risk & Volatility

Kontoor Brands has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500. Comparatively, Superior Group of Companies has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500.

Earnings & Valuation

This table compares Kontoor Brands and Superior Group of Companies”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kontoor Brands	$2.61 billion	1.40	$245.80 million	$3.88	16.90
Superior Group of Companies	$565.68 million	0.28	$12.00 million	$0.36	27.94

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Kontoor Brands and Superior Group of Companies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kontoor Brands	1	3	5	1	2.60
Superior Group of Companies	0	1	3	0	2.75

Kontoor Brands currently has a consensus target price of $84.67, suggesting a potential upside of 29.08%. Superior Group of Companies has a consensus target price of $17.33, suggesting a potential upside of 72.30%. Given Superior Group of Companies’ stronger consensus rating and higher possible upside, analysts plainly believe Superior Group of Companies is more favorable than Kontoor Brands.

Profitability

This table compares Kontoor Brands and Superior Group of Companies’ 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%
Superior Group of Companies	1.00%	2.89%	1.35%

Institutional & Insider Ownership

93.1% of Kontoor Brands shares are held by institutional investors. Comparatively, 33.8% of Superior Group of Companies shares are held by institutional investors. 1.7% of Kontoor Brands shares are held by company insiders. Comparatively, 26.7% of Superior Group of Companies shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Kontoor Brands beats Superior Group of Companies on 12 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 Superior Group of Companies

Superior Group of Companies, Inc. manufactures and sells apparel and accessories in the United States and internationally. It operates through three segments: Branded Products, Healthcare Apparel, and Contact Centers. The Branded Products segment produces and sells customized merchandising solutions, promotional products, and branded uniform to chain retailer, food service, entertainment, technology, transportation, and other industries under BAMKO and HPI brands. The Healthcare Apparel segment manufactures and sells healthcare apparel, such as scrubs, lab coats, protective apparel, and patient gowns under the Fashion Seal Healthcare, CID Resources and Wink, and Carhartt brand names. This segment sells healthcare service apparel to healthcare laundries, dealers, distributors, and physical and e-commerce retailers. The Contact Centers segment offers outsourced, nearshore business process outsourcing, and contact and call-center support services. The company was formerly known as Superior Uniform Group, Inc. and changed its name to Superior Group of Companies, Inc. in May 2018. Superior Group of Companies, Inc. was founded in 1920 and is headquartered in St. Petersburg, Florida.