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Category:Kontoor Brands (KTB) and Levi Strauss (LEVI)
Date: 8 July 2020 Stock price of Kontoor Brands (KTB): $16.27 Stock price of Levi Strauss (LEVI): $12.66 Battle of the denim making firms. We take a look at Kontoor Brands (KTB) and Levi Strauss (LEVI) stock performance over the last couple of years and look at which stock offers the best prospects for future growth based on their current financial position and their current stock price.
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So if one had to buy one of these two denim making stocks now which one is the better buy? Does the stock of Kontoor provide a greater buying opportunity because it declined more than that of Levi Strauss or is there a fundamental it performed worse than Levi over the same period of time? "
More About Kontoor Brands (KTB)
Kontoor Brands, Inc. (NYSE: KTB) is a global lifestyle apparel company, with a portfolio led by two of the world’s most iconic consumer brands: Wrangler® and Lee®. Kontoor designs, manufactures and distributes superior high-quality products that look good and fit right, giving people around the world the freedom and confidence to express themselves. Kontoor Brands is a purpose-led organization focused on leveraging its global platform, strategic sourcing model and best-in-class supply chain to drive brand growth and deliver long-term value for its stakeholders
Overview of Kontoor's latest earnings report
Overview of Kontoor's latest earnings report
- Total revenue: $504.498 million (down from $634.488 million from the same quarter of the previous year)
- Revenues decreased by -22% over the last 12 months
- Total cost and expenses: $504.662 million (down from $623.149 million for the same quarter of the previous year)
- Total cost and expenses decreased by -19% over the last 12 months
- Net loss: -$2.71 million (down from $15.413 million for the same quarter of the previous year)
- Diluted loss per share: -$0.05 (down from $0.27 for the same quarter of the previous year)
- Dividend declared by Kontoor Brands: Dividend has been suspended due to the Covid-19 impact on their earnings
- Diluted weighted-average shares outstanding: 57.947 million (up from 56.648 million for the same quarter of the previous year)
- Cash and cash equivalents: $479.366 million
- Cash and cash equivalents per share: $8.27
- Cash and cash equivalents makes up 47.8% of Kontoor's market capital
- Cash and cash equivalents makes up 25.2% of Kontoor's total assets
- Cash and cash equivalents per share: $8.27
- Receivables: $213.080 million
- Receivables makes up 11.2% of Kontoor's total assets
- Inventories: $488.750 million
- Inventories makes up 25.6% of Kontoor's total assets
- Cash used in operations : $45.417 million
- Cash used operations per share: $0.78
More About Levi Strauss (LEVI)
Levi Strauss & Co. is one of the world's largest brand-name apparel companies and a global leader in jeanswear. The company designs and markets jeans, casual wear and related accessories for men, women and children under the Levi's®, Dockers®, Signature by Levi Strauss & Co.™, and Denizen® brands. Its products are sold in more than 110 countries worldwide through a combination of chain retailers, department stores, online sites, and a global footprint of approximately 3,000 retail stores and shop-in-shops. Levi Strauss & Co.'s reported 2018 net revenues were $5.6 billion.
Overview of Levi Strauss's latest earnings report
Overview of Levi Strauss's latest earnings report
- Total Revenues: $497.542 million (down from $1.312 billion for the same quarter of the previous year)
- Total Revenues decreased by -62.1% over the last 12 months
- Cost of sales: $327.890 million (down from $612.517 million for the same quarter of the previous year)
- Cost of sales decreased by -46.4% over the last 12 months
- Net loss: -$363.539 million (down from $28.230 million for the same quarter of the previous year)
- Diluted loss per share: -$0.91 (down from $0.07 for the same quarter of the previous year)
- PE ratio: Since Levi Strauss & Co is loss making right now a PE ratio cannot be right now
- Diluted loss per share: -$0.91 (down from $0.07 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 397.484 million (up from 409.332 million for the same quarter of the previous year)
- Cash and cash equivalents: $1.448 billion
- Cash and cash equivalents per share: $3.64
- Cash and cash equivalents makes up 26.3% of Levi Strauss' market capital
- Cash and cash equivalents makes up 26.4% of Levi Strauss' total assets
- Cash and cash equivalents per share: $3.64
- Trade receivables: $333.599 million
- Trade receivable makes up 6.1% of Levi Strauss' total assets
- Stockholders equity of Levi Strauss: $1.165 billion
- Stockholders equity per share: $2.93
- So Levi Strauss is trading at 4.72 times its stockholders equity which is outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective firms in the S&P 500 trades at an average price to book value of 3.7
- Stockholders equity per share: $2.93
Kontoor Brands (KTB) stock vs Levi Strauss (LEVI)
The image below shows the stock price performance of Kontoor Brands (KTB) over the last 3 years. Both these firms are active in the clothing and accessories sector but their stock price trends are totally different. Over the 3 year period Kontoor stock decreased by -48.25% while the stock of Levi Strauss (LEVI) declined by a 36.38%
So does the stock of Kontoor (KTB) provide a greater buying opportunity because it has declined more over the three year period while the stock of Levi Strauss (LEVI) decreased less three year period or is there a fundamental financial reason why the stock of Kontoor (KTB) has declined so much more than Levi Strauss (LEVI)
So does the stock of Kontoor (KTB) provide a greater buying opportunity because it has declined more over the three year period while the stock of Levi Strauss (LEVI) decreased less three year period or is there a fundamental financial reason why the stock of Kontoor (KTB) has declined so much more than Levi Strauss (LEVI)
So if one had to buy one of these two denim making stocks now which one is the better buy? Does the stock of Kontoor provide a greater buying opportunity because it declined more than that of Levi Strauss or is there a fundamental it performed worse than Levi over the same period of time?
One of our key metrics is the Price to Stockholders equity per share ratio. When looking at this we find the following for both stocks:
Based on this metric Levi Strauss offers far more value than Kontoor Brands. Most firms tend to trade at a ratio of between 2 and 4 times. LEVI is trading at above the expected range but Kontoor is still in a stockholders deficit
Next up cash as percentage of stock price. Cash per share makes up just over 26.3% of LEVI stock price while Kontoor's cash makes up 47.8% of their stock price. Total cash as percentage of total assets is as follows.
Cash makes up 26.4% of LEVI's total assets while Kontoor cash makes up around 25.2% of their total assets. So it does look like Levi Strauss' is better placed to ride out difficult times as is currently being experienced during Covid-19 as their cash as percentage of total assets is greater than that of Kontoor and they would therefore be less likely to borrow money to keep their operations afloat during the Covid-19 pandemic.
Taking all of the above into consideration, the fact that Kontoor is in a stockholders deficit is a worry for us. While their cash makes up almost 50% of their stock price is a good thing, their cash as percentage of total assets is lower than that of Levi Strauss. When all is said and done we declare Levi Strauss (LEVI) as the WINNER
- Price/Stockholders equity per share for Kontoor Brands: Kontoor doesn't currently have stockholders equity as the group has a stockholders deficit
- Price/Stockholders equity per share for Levi Strauss: 4.7
Based on this metric Levi Strauss offers far more value than Kontoor Brands. Most firms tend to trade at a ratio of between 2 and 4 times. LEVI is trading at above the expected range but Kontoor is still in a stockholders deficit
Next up cash as percentage of stock price. Cash per share makes up just over 26.3% of LEVI stock price while Kontoor's cash makes up 47.8% of their stock price. Total cash as percentage of total assets is as follows.
Cash makes up 26.4% of LEVI's total assets while Kontoor cash makes up around 25.2% of their total assets. So it does look like Levi Strauss' is better placed to ride out difficult times as is currently being experienced during Covid-19 as their cash as percentage of total assets is greater than that of Kontoor and they would therefore be less likely to borrow money to keep their operations afloat during the Covid-19 pandemic.
Taking all of the above into consideration, the fact that Kontoor is in a stockholders deficit is a worry for us. While their cash makes up almost 50% of their stock price is a good thing, their cash as percentage of total assets is lower than that of Levi Strauss. When all is said and done we declare Levi Strauss (LEVI) as the WINNER