Kontoor Brands Inc. Common Stock (KTB)

FairStock Score: 68/100 — STEADY

Key Financials

Strengths

• Generates $254 million in annual free cash flow (6.0% yield on market cap)
• Strong Piotroski F-Score of 8/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• High return on equity of 47.1% demonstrating efficient capital deployment
• Revenue growth of 45.6% demonstrates strong top-line momentum
• Attractive 2.8% dividend yield providing steady income returns

Concerns

• Trades significantly above Graham Number ($31) with negative 148% margin of safety—limited downside protection
• High leverage at 2.29x debt-to-equity increases financial risk and interest expense burden

AI Analysis

Kontoor Brands Inc. Common Stock is a small-cap consumer cyclical company valued at $4.2 billion. The business generates $3.2 billion in annual revenue with a 2.3% net margin and $254 million in free cash flow. From a quality standpoint, Kontoor shows near-perfect Piotroski F-Score of 8/9 indicating exceptional financial health and Altman Z-Score of 2.2 in the grey zone. On valuation, the stock is reasonably priced at 18.7x earnings, with trades far above its Graham Number ($31) with no margin of safety. Growth dynamics show revenue growing at 45.6% and profit growth of 15.3%. The 2.8% dividend yield adds an income component for patient holders. Our composite FairStock Score of 68/100 reflects above-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Kontoor's 46% revenue growth trajectory could accelerate as it captures additional market share in the consumer cyclical sector. With $254 million in annual free cash flow (6.0% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Elevated leverage at 2.3x D/E means rising interest rates or revenue weakness could strain debt covenants and force asset sales at distressed prices. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer