Gildan Activewear (NYSE: GIL) and Ralph Lauren Corporation (NYSE:RL) are both mid-cap consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, risk, earnings and dividends.

Profitability

This table compares Gildan Activewear and Ralph Lauren Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gildan Activewear 14.16% 18.65% 12.68%
Ralph Lauren Corporation -0.27% 13.80% 8.14%

Volatility & Risk

Gildan Activewear has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500. Comparatively, Ralph Lauren Corporation has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Gildan Activewear and Ralph Lauren Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gildan Activewear 0 6 4 0 2.40
Ralph Lauren Corporation 3 11 4 0 2.06

Gildan Activewear currently has a consensus price target of $35.33, suggesting a potential upside of 13.94%. Ralph Lauren Corporation has a consensus price target of $87.15, suggesting a potential upside of 2.49%. Given Gildan Activewear’s stronger consensus rating and higher possible upside, analysts clearly believe Gildan Activewear is more favorable than Ralph Lauren Corporation.

Dividends

Gildan Activewear pays an annual dividend of $0.37 per share and has a dividend yield of 1.2%. Ralph Lauren Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.4%. Gildan Activewear pays out 22.4% of its earnings in the form of a dividend. Ralph Lauren Corporation pays out -869.6% 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. Gildan Activewear has increased its dividend for 5 consecutive years and Ralph Lauren Corporation has increased its dividend for 4 consecutive years. Ralph Lauren Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

72.6% of Gildan Activewear shares are held by institutional investors. Comparatively, 62.9% of Ralph Lauren Corporation shares are held by institutional investors. 32.9% of Ralph Lauren Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Gildan Activewear and Ralph Lauren Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gildan Activewear $2.68 billion 2.60 $567.29 million $1.65 18.79
Ralph Lauren Corporation $6.45 billion 1.07 $987.10 million ($0.23) -369.74

Ralph Lauren Corporation has higher revenue and earnings than Gildan Activewear. Ralph Lauren Corporation is trading at a lower price-to-earnings ratio than Gildan Activewear, indicating that it is currently the more affordable of the two stocks.

Summary

Gildan Activewear beats Ralph Lauren Corporation on 11 of the 16 factors compared between the two stocks.

Gildan Activewear Company Profile

Gildan Activewear Inc. is a manufacturer and marketer of branded basic family apparel, including T-shirts, fleece, sport shirts, underwear, socks, hosiery and shapewear. The Company operates through two segments: Printwear and Branded Apparel. The Printwear segment designs, manufactures, sources, markets, and distributes undecorated activewear products. The Branded Apparel segment designs, manufactures, sources, markets, and distributes branded family apparel, which includes athletic, casual and dress socks, underwear, activewear, sheer hosiery, legwear, and shapewear products, which are sold to retailers in the United States and Canada. The Company sells its products under various brands, including the Gildan, Gold Toe, Anvil, Comfort Colors, American Apparel, Alstyle, Secret, Silks, Kushyfoot, Secret Silky, Therapy Plus, Peds, and MediPeds brands. The Company distributes its products in printwear markets in the United States, Canada, Mexico, Europe, Asia-Pacific and Latin America.

Ralph Lauren Corporation Company Profile

Ralph Lauren Corporation is engaged in the design, marketing and distribution of lifestyle products, including apparel, accessories, home furnishings and other licensed product categories. The Company operates through three segments: Wholesale, Retail and Licensing. Wholesale business consists of sales made to department stores and specialty stores around the world. Retail business consists of sales made directly to consumers through retail channel, which includes Company’s’ retail stores, concession-based shop-within-shops and e-commerce operations around the world. Licensing business consists of royalty-based arrangements, under which the Company licenses to unrelated third parties for specified periods the right to operate retail stores and/or to use its various trademarks in connection with the manufacture and sale of designated products, such as certain apparel, eyewear, fragrances and home furnishings.

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