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Gildan Activewear Inc GIL

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Stock XTSE Rating as of
CAD 45.89 −1.71 (3.59%)
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As of Delayed Price Post-Trading: CAD 45.89 +0.02
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Company Report

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Gildan Earnings: Results Overshadowed by Ongoing Fight for Control; Shares Fairly Valued

David Swartz

No-moat Gildan confirmed its preliminary release on April 15 (see our note) with a first-quarter sales decline of 1%, a bit better than our estimate of a 3% drop. The firm also held to its prior 2024 guidance for flat to low-single-digit percentage revenue growth and adjusted earnings of $2.92-$3.07. Given the results and Gildan’s solid execution in printwear, we expect to lift our earlier $2.99 EPS estimate by about $0.10, which should result in low-single-digit percentage increases in our fair value estimates of $31/CAD 42, leaving shares slightly overvalued.

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Price vs Fair Value

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GIL is trading within a range we consider fairly valued.
Price
CAD 47.60
Fair Value
CAD 33.00
Uncertainty
Medium
1-Star Price
CAD 76.50
5-Star Price
CAD 11.30
Economic Moat
Ympy
Capital Allocation
Xwrxjxg

Bulls Say, Bears Say

Bulls

Gildan has dominant market share in printwear basics and has invested in a low-cost production and distribution process to maintain its position. Demand for imprintables has recovered since a significant drop during the pandemic.

Bears

Limiting its gross margin expansion potential, Gildan’s hosiery and underwear segment has become partially dependent on private-label products as its attempts to build a branded basics business have largely failed.

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Trading Information

Previous Close Price
CAD 47.60
Day Range
CAD 44.23–50.02
52-Week Range
CAD 36.42–52.80
Bid/Ask
CAD 45.87 / CAD 45.90
Market Cap
CAD 7.74 Bil
Volume/Avg
537,128 / 324,629

Key Statistics

Price/Earnings (Normalized)
12.53
Price/Sales
1.92
Dividend Yield (Trailing)
2.15%
Dividend Yield (Forward)
3.19%
Total Yield
8.13%

Company Profile

Gildan is a vertically integrated designer and manufacturer of basic apparel, including T-shirts, underwear, socks, and hosiery. Its primary market is the sale of blank T-shirts, sweatshirts, and other apparel to wholesalers, major clothing brands, and printers (printwear). Gildan also sells branded clothing through retail and direct-to-consumer channels. Brands include Gildan, American Apparel, Comfort Colors, and Gold Toe. Gildan produces most of its clothing at factories in Latin America and recently began operating a new plant in Bangladesh. Incorporated in 1984, the Montreal-based company operates internationally but generates nearly 90% of its sales in the U.S.
Sector
Consumer Cyclical
Industry
Apparel Manufacturing
Stock Style Box
Mid Core
Total Number of Employees
44,000
Website
http://www.gildan.com

Competitors

Valuation

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Metric
GIL
ADDYY
PVH
Price/Earnings (Normalized)
 12.5341.1510.21
Price/Book Value
 3.088.431.28
Price/Sales
 1.921.840.73
Price/Cash Flow
 9.6537.817.53
Price/Earnings
GIL
ADDYY
PVH

Financial Strength

Metric
GIL
ADDYY
PVH
Quick Ratio
 0.780.530.55
Current Ratio
 2.381.221.18
Interest Coverage
 9.611.169.35
Quick Ratio
GIL
ADDYY
PVH

Profitability

Metric
GIL
ADDYY
PVH
Return on Assets (Normalized)
 13.07%0.75%5.77%
Return on Equity (Normalized)
 24.27%2.96%13.00%
Return on Invested Capital (Normalized)
 17.02%2.15%8.28%
Return on Assets
GIL
ADDYY
PVH
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