Comparing adidas (OTCMKTS:ADDDF) and Kontoor Brands (NYSE:KTB)

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

Institutional & Insider Ownership

93.1% of Kontoor Brands shares are owned by institutional investors. Comparatively, 37.4% of adidas shares are owned by institutional investors. 1.8% of Kontoor Brands shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Kontoor Brands and adidas”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kontoor Brands	$3.15 billion	1.49	$227.45 million	$4.94	17.18
adidas	N/A	N/A	N/A	$2.97	63.34

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

Dividends

Kontoor Brands pays an annual dividend of $2.12 per share and has a dividend yield of 2.5%. adidas pays an annual dividend of $1.12 per share and has a dividend yield of 0.6%. Kontoor Brands pays out 42.9% of its earnings in the form of a dividend. adidas pays out 37.9% 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.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Kontoor Brands and adidas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kontoor Brands	1	4	6	1	2.58
adidas	0	0	0	0	0.00

Kontoor Brands currently has a consensus price target of $95.00, suggesting a potential upside of 11.94%. Given Kontoor Brands’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Kontoor Brands is more favorable than adidas.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kontoor Brands	8.21%	60.94%	12.90%
adidas	N/A	N/A	N/A

Summary

Kontoor Brands beats adidas on 13 of the 15 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 adidas

adidas AG, together with its subsidiaries, designs, develops, produces, and markets athletic and sports lifestyle products in Europe, the Middle East, Africa, North America, Greater China, the Asia-Pacific, and Latin America. It offers footwear, apparel, and accessories and gear, such as bags and balls under the adidas brand; golf footwear and apparel under the adidas Golf brand; and outdoor footwear under the Five Ten brand. It sells its products through its own retail stores; mono-branded franchise stores and shop-in-shops; and wholesale and its e-commerce channels. The company was formerly known as adidas-Salomon AG and changed its name to adidas AG in June 2006. adidas AG was founded in 1920 and is headquartered in Herzogenaurach, Germany.