Kontoor Brands, Inc. (NYSE: KTB)

Sector: Consumer Cyclical Industry: Apparel Manufacturing CIK: 0001760965
Market Cap 3.40 Bn
P/B 6.42
P/E 15.62
P/S 1.20
ROIC (Qtr) 12.72
Div Yield % 4.27
Rev 1y % (Qtr) 27.31
Total Debt (Qtr) 1.50 Bn
Debt/Equity (Qtr) 2.83

About

Price action

Investment thesis

Bull case

  • Healthy cash reserves of 82.43M provide 2.15x coverage of short-term debt 38.34M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust free cash flow of 231.95M exceeds capital expenditure of 17.48M by 13.27x, indicating strong organic growth funding capability.
  • Operating cash flow of 249.43M fully covers other non-current liabilities 168.78M by 1.48x, showing strong long-term stability.
  • Tangible assets of 1.89B provide robust 5.99x coverage of other current liabilities 315.20M, indicating strong asset backing.
  • Operating cash flow of 249.43M provides strong 14.27x coverage of capital expenditure 17.48M, enabling organic growth.

Bear case

  • Operating cash flow of 249.43M barely covers its investment activities of (895.72M), with a coverage ratio of -0.28, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 82.43M against inventory of 764.99M, the 0.11 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 249.43M provides thin coverage of dividend payments of (115.37M) with a -2.16 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 82.43M provide limited coverage of acquisition spending of (899.37M), which is -0.09x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Cash position of 82.43M provides weak coverage of payables of 348.74M, which is 0.24x, indicating potential working capital stress and supplier relationship risks.

Peer comparison

Companies in the Apparel Manufacturing
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 RL Ralph Lauren Corp 21.81 Bn 25.53 2.88 2.85 Bn
2 GIL Gildan Activewear Inc. 9.45 Bn 19.89 2.81 1.87 Bn
3 LEVI Levi Strauss & Co 8.22 Bn 13.64 1.29 2.29 Bn
4 VFC V F Corp 7.10 Bn 78.61 0.74 5.79 Bn
5 KTB Kontoor Brands, Inc. 3.40 Bn 15.62 1.20 1.50 Bn
6 PVH Pvh Corp. /De/ 3.39 Bn 9.96 0.38 4.26 Bn
7 COLM Columbia Sportswear Co 3.12 Bn 16.69 0.91 0.48 Bn
8 ZGN Ermenegildo Zegna N.V. 2.55 Bn 43.66 1.13 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.68 1.01
EV to Cash from Ops. EV/CFO 19.33 8.80
EV to Debt EV to Debt 3.21 4.30
EV to EBIT EV/EBIT 14.85 -5.31
EV to EBITDA EV/EBITDA 13.85 -69.89
EV to Free Cash Flow [EV/FCF] EV/FCF 20.79 15.55
EV to Market Cap EV to Market Cap 1.42 1.81
EV to Revenue EV/Rev 1.70 1.14
Price to Book Value [P/B] P/B 6.42 1.78
Price to Earnings [P/E] P/E 15.62 14.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.89 -1.16
Dividend Payout Ratio % Div Payout % (Qtr) 53.20 -3.95
Dividend per Basic Share Div per Share (Qtr) 2.08 0.51
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 49.83 20.82
Interest Coverage Int. cover (Qtr) 6.21 26.98
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 16.71 -10.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -69.41 10.71
Dividend Growth (1y) % Div 1y % (Qtr) 4.00 2.94
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -9.21 -88.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -6.71 11.99
EBIT Growth (1y) % EBIT 1y % (Qtr) -2.32 -49.71
EBT Growth (1y) % EBT 1y % (Qtr) -6.54 -181.63
EPS Growth (1y) % EPS 1y % (Qtr) -13.11 -218.58
FCF Growth (1y) % FCF 1y % (Qtr) -51.10 -29.63
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.81 6.94
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.99 1.16
Cash Payout Ratio Cash Payout (Qtr) 0.43 0.15
Cash Ratio Cash Ratio (Qtr) 0.12 0.28
Current Ratio Curr Ratio (Qtr) 1.91 1.99
Debt to Equity Ratio Debt/Equity (Qtr) 2.83 -1.63
Interest Cover Ratio Int Coverage (Qtr) 6.21 26.98
Times Interest Earned Times Interest Earned (Qtr) 6.21 26.98
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.20 -6.73
EBIT Margin % EBIT Margin % (Qtr) 11.46 -10.67
EBT Margin % EBT Margin % (Qtr) 9.61 -17.44
Gross Margin % Gross Margin % (Qtr) 44.40 49.34
Net Profit Margin % Net Margin % (Qtr) 7.70 -18.93