Kontoor Brands (KTB) AI Stock Analysis

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Kontoor Brands

(NYSE:KTB)

67Neutral

Kontoor Brands exhibits financial stability and strategic growth initiatives, especially with the Wrangler brand and Project Jeanius. However, technical indicators suggest caution due to bearish momentum, and challenges such as Lee brand performance and potential tariffs need addressing.

Positive Factors

Acquisition

The acquisition of Helly Hansen is expected to boost Kontoor Brands' international presence and improve financial metrics.

Cost Savings

Project Jeanius is projected to generate significant cost savings and improve Kontoor Brands' financial performance through operational efficiencies.

Negative Factors

Consumer Behavior

The US consumer is meaningfully slowing down after the holiday season, impacting the company's performance.

Organic Growth

Slower-than-expected synergies from Helly Hansen and weaker organic growth could result in less favorable financial outcomes for Kontoor Brands.

Tariffs

Tariffs on goods sourced from Mexico could pose a significant financial challenge for Kontoor Brands if the 25% tariff is reinstated.

Kontoor Brands (KTB) vs. S&P 500 (SPY)

Market Cap

$3.10B

Dividend Yield3.68%

Average Volume (3M)879.50K

Price to Earnings (P/E)12.8

Beta (1Y)0.74

Revenue Growth0.07%

EPS Growth7.19%

CountryUS

Employees13,200

SectorConsumer Cyclical

Sector Strength63

IndustryApparel - Manufacturers

Share Statistics

EPS (TTM)4.37

Shares Outstanding55,326,050

10 Day Avg. Volume924,267

30 Day Avg. Volume879,505

Financial Highlights & Ratios

PEG Ratio1.78

Price to Book (P/B)N/A

Price to Sales (P/S)1.35

Price to Cash Flow (P/CF)10.80

P/FCF Ratio10.80

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$87.75

Price Target Upside63.56% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

Kontoor Brands Business Overview & Revenue Model

Company DescriptionKontoor Brands, Inc., a lifestyle apparel company, designs, manufactures, procures, markets, and distributes denim, apparel, and accessories under the Wrangler, Lee, and Rock & Republic brands in the United States and internationally. It operates through two segments, Wrangler and Lee. The company sells its products primarily through mass merchants, specialty stores, mid-tier and traditional department stores, company-operated stores, and online. As of January 1, 2022, it operated 80 retail stores across the Americas, Europe, the Middle East, Africa, and the Asia-Pacific regions. The company was incorporated in 2018 and is headquartered in Greensboro, North Carolina.

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

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

Dec 2024	Dec 2023	Dec 2022	Mar 2022	Mar 2021
Breakdown
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

Technical Analysis Sentiment

Negative

Last Price53.65

Price Trends

50DMA

67.68

Negative

100DMA

77.79

Negative

200DMA

76.04

Negative

Market Momentum

MACD

-3.42

Positive

RSI

35.04

Neutral

STOCH

36.18

Neutral

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 53.65 is below the 20-day moving average (MA) of 60.40, below the 50-day MA of 67.68, and below the 200-day MA of 76.04, indicating a bearish trend. The MACD of -3.42 indicates Positive momentum. The RSI at 35.04 is Neutral, neither overbought nor oversold. The STOCH value of 36.18 is Neutral, 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 41 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
KTB	67 Neutral	$3.10B	12.84	63.68%	3.68%	0.07%	7.19%
ZGN	65 Neutral	$2.79B	20.66	8.89%	1.88%	2.26%	-37.52%
COLM	63 Neutral	$3.74B	17.70	12.01%	1.82%	-3.35%	-6.09%
Sector *	60 Neutral	$7.23B	11.55	3.67%	4.04%	2.96%	-13.54%
UA	52 Neutral	$2.39B	―	-6.12%	―	-7.47%	-131.70%
HBI	45 Neutral	$1.57B	―	-43.06%	―	-29.44%	-1343.00%
VFC	44 Neutral	$4.22B	―	-16.13%	3.32%	-8.42%	57.91%

* Consumer Cyclical Sector Average

Performance Comparison

KTB

Kontoor Brands

53.65

-0.20

-0.37%

COLM

Columbia Sportswear

64.91

-9.54

-12.81%

HBI

Hanesbrands

4.32

-0.41

-8.67%

Under Armour

5.28

-1.08

-16.98%

VFC

10.31

-2.10

-16.92%

ZGN

Ermenegildo Zegna

6.86

-4.66

-40.45%

Kontoor Brands Earnings Call Summary

Earnings Call Date: Feb 25, 2025 | % Change Since: -37.20% | Next Earnings Date: May 6, 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.