Kontoor Brands (NYSE:KTB) vs. Hugo Boss (OTCMKTS:BOSSY) Critical Review

Hugo Boss (OTCMKTS:BOSSY) and Kontoor Brands (NYSE:KTB) are both mid-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.

Risk & Volatility

Hugo Boss has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, Kontoor Brands has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hugo Boss	5.27%	17.07%	6.48%
Kontoor Brands	9.35%	72.43%	16.31%

Dividends

Hugo Boss pays an annual dividend of $0.19 per share and has a dividend yield of 2.2%. Kontoor Brands pays an annual dividend of $2.00 per share and has a dividend yield of 2.7%. Hugo Boss pays out 23.2% of its earnings in the form of a dividend. Kontoor Brands pays out 50.6% 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.

Analyst Recommendations

This is a summary of current ratings and target prices for Hugo Boss and Kontoor Brands, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hugo Boss	0	2	1	0	2.33
Kontoor Brands	0	1	6	0	2.86

Kontoor Brands has a consensus target price of $78.83, suggesting a potential upside of 7.45%. Given Kontoor Brands’ stronger consensus rating and higher probable upside, analysts clearly believe Kontoor Brands is more favorable than Hugo Boss.

Valuation & Earnings

This table compares Hugo Boss and Kontoor Brands’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hugo Boss	$4.54 billion	0.66	$279.64 million	$0.82	10.43
Kontoor Brands	$2.61 billion	1.57	$230.99 million	$3.95	18.57

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

Institutional and Insider Ownership

93.1% of Kontoor Brands shares are owned by institutional investors. 2.6% of Kontoor Brands shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Kontoor Brands beats Hugo Boss on 12 of the 16 factors compared between the two stocks.

About Hugo Boss

Hugo Boss AG, together with its subsidiaries, provides apparels, shoes, and accessories for men and women worldwide. It also offers licensed products comprising of fragrances, eyewear, watches, children’s fashion, equestrian, and cycling. The company markets and sells its products under the BOSS and HUGO brand names through freestanding stores, shop-in-shops, factory outlets, multi-brand stores, and franchise business, as well as online retailers, distribution, and stores. Hugo Boss AG was founded in 1924 and is headquartered in Metzingen, Germany.

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.