Critical Review: Unifi (NYSE:UFI) & Kontoor Brands (NYSE:KTB)

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

Risk & Volatility

Kontoor Brands has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Unifi has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500.

Valuation & Earnings

This table compares Kontoor Brands and Unifi”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kontoor Brands	$3.15 billion	1.28	$227.45 million	$4.79	15.47
Unifi	$531.30 million	0.21	-$24.56 million	($0.82)	-7.26

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kontoor Brands	8.21%	59.71%	12.94%
Unifi	-2.91%	-6.71%	-4.01%

Institutional & Insider Ownership

93.1% of Kontoor Brands shares are held by institutional investors. Comparatively, 67.7% of Unifi shares are held by institutional investors. 1.8% of Kontoor Brands shares are held by company insiders. Comparatively, 20.5% of Unifi shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Kontoor Brands and Unifi, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kontoor Brands	1	4	7	0	2.50
Unifi	1	0	0	0	1.00

Kontoor Brands currently has a consensus price target of $96.56, indicating a potential upside of 30.28%. Given Kontoor Brands’ stronger consensus rating and higher probable upside, analysts plainly believe Kontoor Brands is more favorable than Unifi.

Summary

Kontoor Brands beats Unifi on 12 of the 13 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 Unifi

Unifi, Inc., together with its subsidiaries, engages in the manufacture and sale of recycled and synthetic products in North America, Central America, South America, Asia, and Europe. Its polyester products include partially oriented yarn, textured, solution and package dyed, twisted, beamed, and draw wound yarns in virgin or recycled varieties; and nylon products comprise virgin or recycled textured, solution dyed, and spandex covered yarns. The company also provides recycled solutions made from pre-consumer and post-consumer waste, such as plastic bottle flakes, polyester polymer beads, and staple fiber. It offers recycled and synthetic products primarily to yarn manufacturers, knitters, and weavers that produces yarn and fabric for the apparel, hosiery, automotive, home furnishings, industrial, medical, and other end-use markets. The company sells its products through sales force and independent sales agents under the REPREVE brand. Unifi, Inc. was incorporated in 1969 and is headquartered in Greensboro, North Carolina.