lululemon athletica (NASDAQ:LULU) versus Kontoor Brands (NYSE:KTB) Financial Analysis

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

Insider and Institutional Ownership

85.2% of lululemon athletica shares are owned by institutional investors. Comparatively, 93.1% of Kontoor Brands shares are owned by institutional investors. 0.5% of lululemon athletica shares are owned by insiders. Comparatively, 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 company is poised for long-term growth.

Volatility and Risk

lululemon athletica has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, Kontoor Brands has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for lululemon athletica and Kontoor Brands, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
lululemon athletica	2	28	2	1	2.06
Kontoor Brands	1	3	6	1	2.64

lululemon athletica currently has a consensus price target of $201.66, suggesting a potential upside of 54.11%. Kontoor Brands has a consensus price target of $91.33, suggesting a potential upside of 26.57%. Given lululemon athletica’s higher probable upside, analysts clearly believe lululemon athletica is more favorable than Kontoor Brands.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
lululemon athletica	14.22%	34.82%	20.14%
Kontoor Brands	8.30%	60.17%	12.31%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
lululemon athletica	$11.10 billion	1.42	$1.58 billion	$13.30	9.84
Kontoor Brands	$3.15 billion	1.27	$227.45 million	$4.94	14.61

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

About lululemon athletica

Lululemon Athletica Inc., together with its subsidiaries, designs, distributes, and retails athletic apparel, footwear, and accessories under the lululemon brand for women and men. It offers pants, shorts, tops, and jackets for healthy lifestyle, such as yoga, running, training, and other activities. It also provides fitness-inspired accessories. The company sells its products through a chain of company-operated stores; outlets; interactive workout platform; yoga and fitness studios, university campus retailers, and other partners; license and supply arrangements; and temporary locations, as well as through mobile apps and lululemon.com e-commerce website. It has operations in the United States, Canada, Mainland China, Australia, South Korea, Hong Kong, Japan, New Zealand, Taiwan, Singapore, Malaysia, Macau, Thailand, the Asia Pacific, the United Kingdom, Germany, France, Ireland, Spain, the Netherlands, Sweden, Norway, Switzerland, Europe, the Middle East, and Africa. Lululemon Athletica Inc. was founded in 1998 and is based in Vancouver, Canada.

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.