Comparing Kontoor Brands (NYSE:KTB) and Guess? (NYSE:GES)

Kontoor Brands (NYSE:KTB) and Guess? (NYSE:GES) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Kontoor Brands and Guess?, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kontoor Brands	0	1	5	0	2.83
Guess?	0	3	0	0	2.00

Kontoor Brands currently has a consensus price target of $91.33, suggesting a potential upside of 12.63%. Guess? has a consensus price target of $16.75, suggesting a potential upside of 0.39%. Given Kontoor Brands’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Kontoor Brands is more favorable than Guess?.

Volatility & Risk

Kontoor Brands has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500. Comparatively, Guess? has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500.

Profitability

This table compares Kontoor Brands and Guess?’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kontoor Brands	9.48%	68.76%	15.02%
Guess?	1.01%	16.44%	3.05%

Insider and Institutional Ownership

93.1% of Kontoor Brands shares are owned by institutional investors. Comparatively, 61.7% of Guess? shares are owned by institutional investors. 1.7% of Kontoor Brands shares are owned by insiders. Comparatively, 33.7% of Guess? shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Kontoor Brands pays an annual dividend of $2.08 per share and has a dividend yield of 2.6%. Guess? pays an annual dividend of $0.90 per share and has a dividend yield of 5.4%. Kontoor Brands pays out 46.4% of its earnings in the form of a dividend. Guess? pays out 562.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kontoor Brands has raised its dividend for 1 consecutive years and Guess? has raised its dividend for 4 consecutive years. Guess? is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Kontoor Brands and Guess?”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kontoor Brands	$2.65 billion	1.70	$245.80 million	$4.48	18.10
Guess?	$3.00 billion	0.29	$60.42 million	$0.16	104.28

Kontoor Brands has higher earnings, but lower revenue than Guess?. Kontoor Brands is trading at a lower price-to-earnings ratio than Guess?, indicating that it is currently the more affordable of the two stocks.

Summary

Kontoor Brands beats Guess? on 11 of the 17 factors compared between the two stocks.

About Kontoor Brands

Kontoor Brands, Inc., a lifestyle apparel company, designs, produces, procures, markets, distributes, and licenses denim, apparel, footwear, and accessories, primarily under the Wrangler and Lee brands. The company operates through two segments: Wrangler and Lee. It licenses and sells apparel under the Rock & Republic brand name. The company sells its products primarily through mass merchants, specialty stores, mid-tier and traditional department stores, company-operated stores, and online. It operates in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific regions. Kontoor Brands, Inc. was incorporated in 2018 and is headquartered in Greensboro, North Carolina.

About Guess?

Guess?, Inc. designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children. It operates through five segments: Americas Retail, Americas Wholesale, Europe, Asia, and Licensing. The company’s clothing collection includes jeans, pants, skirts, dresses, shorts, blouses, shirts, jackets, activewear, knitwear, and intimate apparel. It also grants licenses to design, manufacture, and distribute various products that complement its apparel lines, such as eyewear, watches, handbags, footwear, kids’ and infants’ apparel, outerwear, fragrance, jewelry, and other fashion accessories, as well as to wholesale partners to operate and sell products through licensed retail stores. The company markets its products under the GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, GUESS? and Triangle Design, MARCIANO, Question Mark and Triangle Design, a stylized G and a stylized M, GUESS Kids, Baby GUESS, YES, G by GUESS, GUESS by MARCIANO, and Gc brand names. It sells its products through direct-to-consumer, wholesale, and licensing distribution channels, as well as through its retail websites. Guess?, Inc. was founded in 1981 and is headquartered in Los Angeles, California.