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Gildan Activewear (TSE:GIL)
TSX:GIL
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Gildan Activewear
(TSX:GIL)74Outperform
Positive Factors
Market Share Gains
Gildan is well-positioned to leverage its low-cost manufacturing position to aggressively pursue share gains.
Organic Growth
Management's call commentary expressed confidence in Gildan's ability to drive continued organic growth across all channels, with ~75% of 2025E growth coming from new programs and ~25% from market share gains.
Negative Factors
License Phase-Out
Hosiery & underwear sales decreased by 18.1% year-over-year, mainly due to the phase-out of the Under Armour socks license.
Gildan Activewear (GIL) vs. S&P 500 (SPY)
Market Cap
$11.66B
Dividend Yield1.55%
Average Volume (3M)379.38K
Price to Earnings (P/E)22.8
Beta (1Y)0.97
Revenue Growth4.03%
EPS Growth-16.63%
CountryCA
Employees43,000
SectorConsumer Cyclical
Sector Strength53
IndustryApparel & Luxury
Share Statistics
EPS (TTM)3.42
Shares Outstanding151,851,180
10 Day Avg. Volume454,055
30 Day Avg. Volume379,379
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.67
Price to Cash Flow (P/CF)10.40
P/FCF Ratio11.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$90.04Price Target Upside22.17% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
Gildan Activewear Business Overview & Revenue Model
Company DescriptionGildan Activewear, Inc. engages in the manufacture and sale of printwear and branded apparel. Its products include activewear, underwear, socks, hosiery, and legwear. The firm operates under the brand name Gildan, American Apparel, Comfort Colors, Gold Toe, Anvil, Secret, Silks, Kushyfoot, Peds, and Mossy Oak. The company was founded by Glenn J. Chamandy and H. Gregory Chamandy on May 8, 1984 and is headquartered in Montréal, Canada.
How the Company Makes MoneyGildan Activewear generates revenue primarily through the sale of its products to wholesale distributors, screen printers, and embellishers who further sell to retailers and consumers. Its revenue streams are diversified across various product categories such as activewear, underwear, and socks. A significant portion of Gildan's earnings comes from its large-scale production and distribution capabilities, supported by its vertically integrated manufacturing process which reduces costs and enhances efficiency. Additionally, Gildan capitalizes on its strong brand portfolio, including its flagship Gildan brand and other acquired brands, to drive sales. Strategic partnerships and collaborations with retailers and distributors further extend its market reach, contributing to its revenue growth.
Gildan Activewear Financial Statement Overview
Summary
Gildan Activewear exhibits strong revenue growth and improved gross profit margins. However, net profit margins have slightly compressed, and increased leverage presents potential risk. Cash flow generation remains solid despite a decrease in operating cash flow.Income Statement
Gildan Activewear has demonstrated solid revenue growth with a steady increase from $2.92 billion in 2021 to $3.27 billion in 2024, reflecting a positive trajectory. The gross profit margin has improved to 30.7% in 2024, indicating efficient cost management. However, net profit margin dipped slightly from 16.7% in 2023 to 12.3% in 2024, suggesting some pressure on profitability. The EBIT and EBITDA margins remain stable, showcasing consistent operational performance.78
Positive
Balance Sheet
The company's balance sheet shows a rise in total debt, leading to an increased debt-to-equity ratio from 0.55 in 2021 to 1.14 in 2024, which may indicate higher leverage risk. Stockholders' equity has decreased, impacting the equity ratio, which fell to 39.2% in 2024. Return on equity has also declined from 27.8% in 2021 to 27.5% in 2024, reflecting a slight decrease in profitability relative to shareholders' equity.65
Positive
Cash Flow
Operating cash flow has decreased from $617.5 million in 2021 to $501.4 million in 2024, showing a reduction in cash generation capability. However, free cash flow has remained relatively stable, with a growth in 2024 to $351.0 million. The operating cash flow to net income ratio is robust, indicating strong cash conversion, but the free cash flow to net income ratio shows slight volatility.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.27B | 3.20B | 3.24B | 2.92B | 1.98B | Gross Profit |
| 1.00B | 880.05M | 992.41M | 940.21M | 249.06M | EBIT |
| 618.24M | 643.85M | 603.38M | 651.89M | -23.25M | EBITDA |
| 737.74M | 743.03M | 720.12M | 777.69M | -48.51M | Net Income Common Stockholders |
| 400.87M | 533.58M | 541.54M | 607.18M | -225.28M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 98.80M | 134.78M | 150.42M | 179.25M | 505.26M | Total Assets |
| 3.72B | 3.51B | 3.44B | 3.14B | 3.02B | Total Debt |
| 1.65B | 1.08B | 1.02B | 709.10M | 1.08B | Net Debt |
| 1.55B | 993.42M | 873.57M | 529.86M | 577.20M | Total Liabilities |
| 2.26B | 1.56B | 1.56B | 1.22B | 1.46B | Stockholders Equity |
| 1.46B | 1.96B | 1.88B | 1.92B | 1.56B |
| Cash Flow | Free Cash Flow | |||
| 351.04M | 338.60M | 168.93M | 487.29M | 356.69M | Operating Cash Flow |
| 501.39M | 546.61M | 413.49M | 617.51M | 415.03M | Investing Cash Flow |
| -112.12M | -154.86M | -182.40M | -187.83M | -57.51M | Financing Cash Flow |
| -379.35M | -452.78M | -258.27M | -754.75M | 83.54M |
Gildan Activewear Technical Analysis
Neutral
73.70
Price Trends
72.31
Positive
70.05
Positive
62.84
Positive
Market Momentum
1.19
Positive
45.39
Neutral
50.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:GIL, the sentiment is Neutral. The current price of 73.7 is below the 20-day moving average (MA) of 75.17, above the 50-day MA of 72.31, and above the 200-day MA of 62.84, indicating a neutral trend. The MACD of 1.19 indicates Positive momentum. The RSI at 45.39 is Neutral, neither overbought nor oversold. The STOCH value of 50.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:GIL.
Gildan Activewear Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $11.66B | 22.78 | 27.52% | 1.55% | 4.03% | -16.63% | |
66 Neutral | C$2.70B | 24.35 | 5.82% | 1.54% | 20.89% | -43.13% | |
64 Neutral | C$97.07M | 33.52 | 1.60% | ― | -2.09% | 2551.85% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
28 Underperform | C$71.23M | ― | 2492.91% | ― | 19.47% | -9.09% |
* Consumer Cyclical Sector Average
Performance Comparison
TSE:GIL
Gildan Activewear
73.70
28.96
64.73%
TSE:DYA
dynaCERT
0.15
0.00
0.00%
TSE:TOY
Spin Master
26.45
-5.81
-18.01%
GOOS
Canada Goose Holdings
9.64
-3.24
-25.16%
TSE:ROOT
Roots Corporation
2.40
0.00
0.00%
ATZAF
Aritzia
40.40
14.97
58.87%
Gildan Activewear Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: 0.00% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
Gildan Activewear Inc. reported strong financial performance with record revenues, significant shareholder returns, and successful product innovations driving growth. However, challenges such as the phase-out of Under Armour impacting hosiery and underwear sales, increased tax rates, and macroeconomic uncertainties present potential headwinds. Despite these challenges, the company's positive outlook for 2025 suggests optimism in its growth strategy.Highlights
Record Fourth-Quarter Sales
Gildan Activewear Inc. delivered record fourth-quarter sales of $822 million, up 5% compared to the previous year. Excluding the phase-out of Under Armour, the growth rate was in the low double digits.
Record Full-Year Financial Performance
The company achieved record revenues of about $3.3 billion, a strong adjusted operating margin of 21.3%, and adjusted diluted EPS growth of 17% year over year. A record $889 million was returned to shareholders in 2024.
International Sales Recovery
International business saw a 20% increase in sales over the last two quarters, driven by market recovery and capacity expansion in Bangladesh.
Innovation and Product Expansion
Strong reception of new innovations such as soft cotton technology, plasma print technology, and ColorBlast, with significant growth in the Comfort Colors brand, up 40% for the full year.
Guidance for 2025
The company expects mid-single-digit revenue growth for 2025, adjusted diluted EPS to increase by 13% to 19%, and free cash flow above $450 million.
Lowlights
Hosiery and Underwear Sales Decline
Hosiery and underwear category declined by 23% year over year, primarily due to the phase-out of the Under Armour business.
Gross Margin Concerns
Fourth-quarter gross margin was slightly below expectations, driven by tactical pricing and FX impacts.
Macroeconomic and Geopolitical Uncertainty
The company remains cautious due to a mixed macroeconomic backdrop and geopolitical uncertainties, which could impact future performance.
Increased Tax Rate
The adjusted effective income tax rate for the fourth quarter was 13.4%, up from 3.1% the previous year due to the enactment of global minimum tax in Canada and Barbados.
Company Guidance
During Gildan Activewear Inc.'s 2024 Q4 earnings call, the company provided guidance for 2025, highlighting several key metrics. Gildan anticipates mid-single-digit revenue growth for the full year, with adjusted diluted EPS expected to range from $3.38 to $3.58, representing a 13% to 19% increase year over year. The company also forecasts an approximately 50 basis point increase in full-year adjusted operating margin. Capital expenditures are projected to be around 5% of sales, and free cash flow is expected to exceed $450 million. Gildan expects Q1 2025 net sales to grow in the low single digits, or mid-single digits when excluding the impact of the Under Armour phase-out. The company plans to continue repurchasing shares, maintaining a leverage ratio target of 1.5 to 2.5 times net debt to adjusted EBITDA. The guidance is underpinned by anticipated growth in key product categories, market share gains, and continued benefits from recent innovations and market dynamics.Gildan Activewear Corporate Events
Gildan Activewear Launches C$700 Million Note Offering
Nov 21, 2024
Gildan Activewear Inc. has announced a private offering of C$700 million in senior unsecured notes to be issued in two series, intended for repaying existing debts and other corporate uses. The notes, rated BBB with a stable trend, are being offered through a syndicate of major financial institutions and are expected to close soon. This move could interest investors looking at Gildan’s financial strategies and market offerings.
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.