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Kontoor Brands Inc (KTB)
NYSE:KTB
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Kontoor Brands
(NYSE:KTB)67Neutral
Positive Factors
Acquisition
KTB announced they are acquiring Helly Hansen for $900M, which is expected to grow revenues and improve margins.
Cost Savings
Project Jeanius is expected to result in significant cost savings, contributing positively to the company's earnings over time.
Negative Factors
Tariffs
The potential impact of a 25% tariff from Mexico poses a significant $50M profit headwind for the company.
Kontoor Brands (KTB) vs. S&P 500 (SPY)
Market Cap
$3.46B
Dividend Yield3.23%
Average Volume (3M)789.83K
Price to Earnings (P/E)14.3
Beta (1Y)0.81
Revenue Growth0.07%
EPS Growth7.19%
CountryUS
Employees13,700
SectorConsumer Cyclical
Sector Strength53
IndustryApparel & Luxury
Share Statistics
EPS (TTM)4.37
Shares Outstanding55,326,050
10 Day Avg. Volume1,274,020
30 Day Avg. Volume789,833
Financial Highlights & Ratios
PEG Ratio1.99
Price to Book (P/B)N/A
Price to Sales (P/S)1.34
Price to Cash Flow (P/CF)10.70
P/FCF Ratio10.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$93.00Price Target Upside50.93% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Kontoor Brands Business Overview & Revenue Model
Company DescriptionKontoor Brands, Inc. engages in the manufacture and sale of apparel. It designs, manufactures, sources, markets, and distributes its portfolio of brands which include Wrangler and Lee denim, apparel, and accessories. The company was founded on November 11, 2018 and is headquartered in Greensboro, NC.
How the Company Makes MoneyKontoor Brands generates revenue through the design, production, and sale of its apparel products under the Wrangler and Lee brands. The company primarily sells its products through wholesale channels, which include major retailers and department stores globally, as well as through its direct-to-consumer operations, which encompass brand-specific e-commerce platforms and retail stores. Key revenue streams include the sale of denim products, casual wear, and workwear. Kontoor Brands focuses on maintaining strong relationships with retail partners and enhancing its digital presence to drive sales growth. Additionally, the company leverages its brand heritage and ongoing innovation in product development to appeal to a broad consumer base, supporting its revenue generation efforts.
Kontoor Brands Financial Statement Overview
Summary
Kontoor Brands shows consistent profitability and strong cash flow capabilities, though slight revenue fluctuations and a moderate debt-to-equity ratio present some risks.Income Statement
Kontoor Brands shows a consistent gross profit and EBIT margin, with slight fluctuations in net profit margin. The revenue growth is stable, indicating a robust business model. However, there was a minor decline in revenue in 2022. The company maintains healthy EBITDA margins, which are crucial for maintaining operations in the apparel industry.75
Positive
Balance Sheet
The company has a moderate debt-to-equity ratio, indicating a balanced approach to leveraging. The return on equity has improved over the years, showing effective management of shareholder funds. The equity ratio suggests a lower reliance on equity financing, which could be a risk if not managed carefully.68
Positive
Cash Flow
Kontoor Brands has demonstrated strong free cash flow growth, underscoring its ability to generate cash efficiently. The operating cash flow to net income ratio is healthy, indicating good cash conversion. Despite fluctuations in financing cash flow, the company maintains a solid cash flow position, which is vital for business sustainability.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.61B | 2.61B | 2.63B | 2.48B | 2.10B | Gross Profit |
| 1.16B | 1.09B | 1.13B | 1.11B | 863.69M | EBIT |
| 342.29M | 319.27M | 356.67M | 282.98M | 123.83M | EBITDA |
| 342.29M | 350.35M | 407.48M | 320.57M | 183.77M | Net Income Common Stockholders |
| 245.80M | 230.99M | 245.49M | 195.42M | 67.92M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 334.07M | 215.05M | 59.18M | 185.32M | 248.14M | Total Assets |
| 1.65B | 1.65B | 1.58B | 1.53B | 1.55B | Total Debt |
| 791.16M | 841.68M | 851.30M | 848.75M | 981.21M | Net Debt |
| 457.09M | 626.63M | 792.12M | 663.43M | 733.07M | Total Liabilities |
| 1.25B | 1.27B | 1.33B | 1.38B | 1.46B | Stockholders Equity |
| 400.06M | 371.91M | 250.76M | 148.14M | 84.64M |
| Cash Flow | Free Cash Flow | |||
| 368.23M | 319.17M | 55.19M | 246.99M | 179.58M | Operating Cash Flow |
| 368.23M | 356.55M | 83.58M | 283.86M | 241.97M | Investing Cash Flow |
| -22.26M | -39.14M | -30.12M | -39.37M | -49.07M | Financing Cash Flow |
| -240.35M | -155.70M | -170.91M | -304.07M | -57.69M |
Kontoor Brands Technical Analysis
Negative
61.62
Price Trends
84.22
Negative
85.09
Negative
77.90
Negative
Market Momentum
-6.44
Positive
21.09
Positive
2.63
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KTB, the sentiment is Negative. The current price of 61.62 is below the 20-day moving average (MA) of 78.89, below the 50-day MA of 84.22, and below the 200-day MA of 77.90, indicating a bearish trend. The MACD of -6.44 indicates Positive momentum. The RSI at 21.09 is Positive, neither overbought nor oversold. The STOCH value of 2.63 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KTB.
Kontoor Brands Risk Analysis
Kontoor Brands disclosed 40 risk factors in its most recent earnings report. Kontoor Brands reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kontoor Brands Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $5.66B | 6.50 | 57.76% | ― | 3.53% | 24.55% | |
69 Neutral | $1.12B | 6.71 | 11.02% | ― | -2.57% | ― | |
67 Neutral | $3.46B | 14.33 | 61.44% | 3.23% | 0.07% | 7.19% | |
67 Neutral | $3.90B | 5.71 | 13.48% | 0.21% | -4.83% | 45.23% | |
66 Neutral | $6.55B | 31.62 | 10.69% | 3.08% | 2.96% | -15.58% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
58 Neutral | $8.78B | ― | -16.13% | 1.60% | -8.42% | 57.91% |
* Consumer Cyclical Sector Average
Performance Comparison
KTB
Kontoor Brands
61.62
2.33
3.93%
CROX
Crocs
103.85
-16.54
-13.74%
GIII
G-III Apparel Group
25.66
-3.64
-12.42%
PVH
PVH
71.26
-63.94
-47.29%
VFC
VF
23.45
7.97
51.49%
LEVI
Levi Strauss & Co
16.66
-1.14
-6.40%
Kontoor Brands Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: -28.49% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call revealed a strong performance for Kontoor Brands, particularly through the success of the Wrangler brand and progress in Project Jeanius. However, challenges remain with the Lee brand and potential tariff impacts. While the highlights are significant, the lowlights present key challenges that need addressing.Highlights
Strong Revenue Growth
Kontoor Brands reported a 5% increase in global revenue for the fourth quarter, driven by stronger-than-expected results in the U.S. and Asia.
Wrangler Brand Success
Wrangler's global revenue increased 9% in the fourth quarter, with growth in every channel and geography. The brand gained 220 basis points of market share in the fourth quarter.
Project Jeanius Progress
The company progressed with Project Jeanius, raising the expected savings target to $100 million, with benefits starting to flow through the P&L in 2025.
Cash Generation and Shareholder Returns
Kontoor Brands generated approximately $370 million in cash from operations, returning almost $200 million to shareholders through dividends and share repurchases.
Outdoor Segment Growth
The outdoor segment grew 15% last year, doubling from approximately $100 million five years ago.
Lowlights
Lee Brand Challenges
Lee's global revenue decreased by 5% in the fourth quarter, with challenges in the mid-tier channel pressuring wholesale revenue more than anticipated.
Potential Tariff Impact
The unmitigated impact of proposed tariffs could be approximately $50 million to operating profit in 2025 if implemented, requiring mitigating actions.
Softening POS Trends
Point of sale trends softened over the last four to six weeks, with February POS declining at a low single-digit rate due to weather disruption and subdued consumer spending.
Company Guidance
During the Kontoor Brands Q4 2024 earnings call, the company provided guidance for 2025, highlighting several key metrics and strategic initiatives. Kontoor Brands expects full-year revenue growth of 1% to 3%, with adjusted gross margin estimated to expand by 20 to 40 basis points, reaching between 45.3% and 45.5%. The company anticipates generating over $300 million in cash from operations, excluding the impact of the acquisition of Helly Hansen. Project Jeanius, Kontoor's transformation program, is expected to deliver approximately $30 million in savings for 2025, contributing 10 to 20 basis points to gross margin expansion and $10 million to $15 million to operating income. Kontoor remains confident in its growth strategy, supported by investments in demand creation, product development, and distribution expansion, particularly for its Wrangler brand, which saw significant market share gains.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.