Kontoor Brands (KTB) AI Stock Analysis

• Market Cap: $3.32B
• Dividend Yield: 3.36%
• Average Volume (3M): 662.88K
• Price to Earnings (P/E): 15.3
• Beta (1Y): 1.25
• Revenue Growth: 9.90%
• EPS Growth: -12.67%
• Country: US
• Employees: 13,200
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Manufacturers
• EPS (TTM): 1.44
• Shares Outstanding: 55,593,613
• 10 Day Avg. Volume: 602,834
• 30 Day Avg. Volume: 662,885
• PEG Ratio: 2.74
• Price to Book (P/B): 11.83
• Price to Sales (P/S): 1.81
• P/FCF Ratio: 13.67
• Enterprise Value/Market Cap: 1.43
• Enterprise Value/Revenue: 1.67
• Enterprise Value/Gross Profit: 3.65
• Enterprise Value/Ebitda: 12.73
• 1Y Price Target: $90.50
• Price Target Upside: 51.52% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 66 Neutral
• Price Target: $62.00 ▲(3.80% Upside)

Kontoor Brands' overall stock score is driven by its strong earnings call performance and reasonable valuation, including an attractive dividend yield. However, financial performance is hindered by high leverage and declining cash flow growth, while technical indicators suggest a bearish trend. The recent dividend increase is a positive corporate event, but challenges such as Lee's revenue decline and inventory issues remain.

Positive Factors

Wrangler Market Share Gains

Sustained, multi-quarter market share gains and double-digit digital growth indicate durable brand strength and effective omnichannel execution. This provides pricing leverage, recurring revenue, and a lower-cost growth lever versus customer acquisition, supporting long-term margin and share expansion.

Helly Hansen Acquisition Traction

Rapid Helly Hansen growth and geographic traction diversify Kontoor's brand portfolio and reduce reliance on legacy denim. Projected synergies and award-driven product credibility can sustainably lift margins and international revenue mix, strengthening long-term growth optionality.

Healthy Profitability Metrics

Robust gross and operating margins reflect lasting pricing power and cost structure advantages in branded apparel. Consistent profitability supports reinvestment in DTC, marketing, and dividends while providing a buffer against cyclical retail pressures and competitive discounting.

Negative Factors

High Financial Leverage

Elevated leverage constrains strategic flexibility, raises sensitivity to interest rates, and limits capacity for M&A or large reinvestments without further debt reduction. Even planned paydowns rely on consistent cash generation, making capital structure a persistent vulnerability over the medium term.

Declining Cash Flow Conversion

Weaker cash conversion signals structural pressure on the company's ability to fund debt reduction, capex, and shareholder returns from operations. Persistent cash flow erosion increases reliance on financing and could delay strategic investments needed to sustain brand and digital initiatives.

Lee Brand Weakness

A material decline in a core brand points to product-market mismatch or executional gaps. Prolonged weakness reduces portfolio diversification benefits, may require sustained marketing or restructuring spend, and can pressure consolidated revenue growth and operating leverage over multiple quarters.

Kontoor Brands Business Overview & Revenue Model

Company Description

Kontoor 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 Money

Kontoor Brands generates revenue through the sale of its branded apparel, primarily jeans and casual wear, across various distribution channels including wholesale, direct-to-consumer retail, and e-commerce platforms. Key revenue streams include wholesale partnerships with department stores, specialty retailers, and mass retailers, as well as direct sales through company-owned stores and online platforms. The company benefits from strong brand recognition and loyalty, which drives consistent sales. Additionally, Kontoor Brands engages in strategic partnerships and collaborations that enhance its market presence and expand its reach to new customer segments, contributing to its overall revenue growth.

Kontoor Brands Financial Statement Overview

Summary

Kontoor Brands demonstrates strong revenue growth and profitability, with solid margins and effective equity utilization. However, high leverage and declining cash flow growth present potential risks. The company should focus on improving cash flow management and reducing debt levels to enhance financial stability.

Income Statement

Kontoor Brands has shown a solid revenue growth rate of 6.9% in the TTM, indicating a positive trajectory. The gross profit margin of 45.8% and net profit margin of 7.7% reflect strong profitability, although slightly lower than the previous year. The EBIT and EBITDA margins are healthy at 11.4% and 13.1%, respectively, suggesting efficient operational management. However, the decline in EBIT margin compared to the previous year is a point of concern.

Balance Sheet

The company's balance sheet shows a high debt-to-equity ratio of 2.83, indicating significant leverage, which poses a risk. The return on equity is strong at 46.9%, reflecting effective use of equity to generate profits. However, the equity ratio is relatively low, suggesting a reliance on debt financing. The improvement in stockholders' equity over the years is a positive sign.

Cash Flow

Kontoor Brands experienced a decline in free cash flow growth by 24.5% in the TTM, which is concerning. The operating cash flow to net income ratio is 0.18, indicating a weaker cash conversion from earnings. However, the free cash flow to net income ratio remains robust at 93.8%, suggesting that the company is still generating significant cash relative to its net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.83B	2.61B	2.61B	2.63B	2.48B	2.10B
Gross Profit	1.30B	1.16B	1.09B	1.13B	1.11B	863.69M
EBITDA	372.11M	384.88M	350.35M	391.18M	320.10M	157.42M
Net Income	217.67M	245.80M	230.99M	245.49M	195.42M	67.92M
Balance Sheet
Total Assets	2.86B	1.65B	1.65B	1.58B	1.53B	1.55B
Cash, Cash Equivalents and Short-Term Investments	82.43M	334.07M	215.05M	59.18M	185.32M	248.14M
Total Debt	1.50B	791.16M	841.68M	851.30M	848.75M	981.21M
Total Liabilities	2.33B	1.25B	1.27B	1.33B	1.38B	1.46B
Stockholders Equity	529.62M	400.06M	371.91M	250.76M	148.14M	84.64M
Cash Flow
Free Cash Flow	225.96M	346.11M	319.17M	55.19M	246.99M	179.58M
Operating Cash Flow	249.43M	368.23M	356.55M	83.58M	283.86M	241.97M
Investing Cash Flow	-895.72M	-22.26M	-39.14M	-30.12M	-39.37M	-49.07M
Financing Cash Flow	472.25M	-240.35M	-155.70M	-170.91M	-304.07M	-57.69M

Kontoor Brands Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 59.73
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KTB, the sentiment is Neutral. The current price of 59.73 is above the 20-day moving average (MA) of 59.66, below the 50-day MA of 64.83, and below the 200-day MA of 69.03, indicating a neutral trend. The MACD of -1.66 indicates Negative momentum. The RSI at 45.31 is Neutral, neither overbought nor oversold. The STOCH value of 52.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KTB.

Kontoor Brands Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RL	76 Outperform	$21.43B	26.23	34.01%	0.93%	12.32%	29.40%
COLM	69 Neutral	$2.98B	16.28	10.84%	2.18%	2.76%	-7.83%
KTB	66 Neutral	$3.32B	15.29	49.11%	3.36%	9.90%	-12.67%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
VFC	53 Neutral	$7.66B	36.48	12.93%	1.95%	-4.56%	―