Analyzing Kontoor Brands (NYSE:KTB) and Wacoal (OTCMKTS:WACLY)

Wacoal (OTCMKTS:WACLY) and Kontoor Brands (NYSE:KTB) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, earnings, profitability, analyst recommendations, institutional ownership and valuation.

Earnings & Valuation

This table compares Wacoal and Kontoor Brands”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wacoal	$1.14 billion	1.29	$46.13 million	$7.45	19.21
Kontoor Brands	$2.61 billion	1.34	$245.80 million	$3.88	16.14

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

Insider and Institutional Ownership

93.1% of Kontoor Brands shares are held by institutional investors. 0.8% of Wacoal shares are held by company insiders. Comparatively, 1.7% of Kontoor Brands shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Wacoal and Kontoor Brands, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wacoal	0	0	0	0	0.00
Kontoor Brands	1	2	6	1	2.70

Kontoor Brands has a consensus target price of $90.25, indicating a potential upside of 44.09%. Given Kontoor Brands’ stronger consensus rating and higher probable upside, analysts plainly believe Kontoor Brands is more favorable than Wacoal.

Dividends

Wacoal pays an annual dividend of $2.52 per share and has a dividend yield of 1.8%. Kontoor Brands pays an annual dividend of $2.12 per share and has a dividend yield of 3.4%. Wacoal pays out 33.8% of its earnings in the form of a dividend. Kontoor Brands pays out 54.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Kontoor Brands has raised its dividend for 1 consecutive years. Kontoor Brands is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Wacoal and Kontoor Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wacoal	6.48%	5.46%	3.94%
Kontoor Brands	7.68%	63.21%	13.16%

Risk & Volatility

Wacoal has a beta of -0.02, suggesting that its share price is 102% less volatile than the S&P 500. Comparatively, Kontoor Brands has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.

Summary

Kontoor Brands beats Wacoal on 15 of the 18 factors compared between the two stocks.

About Wacoal

Wacoal Holdings Corp. engages in the manufacturing, wholesale, and retail sale of intimate apparel, outerwear, sportswear, and other textile products and accessories in Japan, Asia, Oceania, the United States, and Europe. The company operates through Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John Business, and Other Businesses segments. It offers intimate apparel mainly women’s foundation wear, lingerie, nightwear and children’s underwear; and outerwear, sportswear, and other textile products and accessories. The company also engages in the restaurant, cultural and service-related businesses; and manufacture and sale of mannequins and fixtures, interior design work, and other textile-related businesses. It offers products through department stores, general merchandisers, and other general retailers in Japan, as well as directly managed retail stores, E-commerce websites, and distributors in Japan and internationally. Wacoal Holdings Corp. was founded in 1946 and is headquartered in Kyoto, Japan.

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.