Gildan Activewear (NYSE:GIL) & Adidas (OTCMKTS:ADDYY) Financial Contrast

Adidas (OTCMKTS:ADDYY) and Gildan Activewear (NYSE:GIL) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, profitability and risk.

Volatility and Risk

Adidas has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500. Comparatively, Gildan Activewear has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Earnings & Valuation

This table compares Adidas and Gildan Activewear”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Adidas	$28.06 billion	1.05	$1.52 billion	$4.54	18.21
Gildan Activewear	$3.62 billion	2.17	$398.88 million	$0.52	81.52

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

Dividends

Adidas pays an annual dividend of $1.17 per share and has a dividend yield of 1.4%. Gildan Activewear pays an annual dividend of $1.00 per share and has a dividend yield of 2.4%. Adidas pays out 25.8% of its earnings in the form of a dividend. Gildan Activewear pays out 192.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gildan Activewear has increased its dividend for 2 consecutive years. Gildan Activewear is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

82.8% of Gildan Activewear shares are owned by institutional investors. 2.0% of Gildan Activewear shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Adidas	5.30%	22.35%	6.80%
Gildan Activewear	1.28%	21.03%	7.07%

Analyst Recommendations

This is a summary of recent ratings for Adidas and Gildan Activewear, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Adidas	1	4	10	1	2.69
Gildan Activewear	0	3	13	0	2.81

Adidas currently has a consensus target price of $146.02, indicating a potential upside of 76.63%. Gildan Activewear has a consensus target price of $76.50, indicating a potential upside of 80.46%. Given Gildan Activewear’s stronger consensus rating and higher possible upside, analysts clearly believe Gildan Activewear is more favorable than Adidas.

Summary

Gildan Activewear beats Adidas on 10 of the 18 factors compared between the two stocks.

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.

About Gildan Activewear

Gildan Activewear Inc. manufactures and sells various apparel products in the United States, North America, Europe, Asia-Pacific, and Latin America. It provides various activewear products, including T-shirts, fleece tops and bottoms, and sports shirts under the Gildan, Gildan Performance, Gildan Hammer, Glidan Softstyle, Gildan Heavy Cotton, Gildan Ultra Cotton, Gildan DryBlend, Gildan HeavyBlend, Comfort Colors, and American Apparel brands. The company also offers hosiery products comprising athletic; dress; and casual, liner, therapeutic, and workwear socks under the Gildan, Under Armour, GoldToe, Signature Gold by Goldtoe, Peds, MediPeds, All Pro, and GoldTeo Edition TM brands. In addition, it provides men's and boys' underwear products, and ladies panties under the Gildan and Gildan Platinum brands. The company sells its products to wholesale distributors, screen printers, and embellishers, as well as to retailers and lifestyle brand companies. The company was formerly known as Textiles Gildan Inc. and changed its name to Gildan Activewear Inc. in March 1995. Gildan Activewear Inc. was founded in 1946 and is headquartered in Montreal, Canada.