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Gildan Activewear Inc GIL

Morningstar Rating
$36.21 +0.42 (1.17%)
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Company Report

No-Moat Gildan Is Investing in Operations Amid Volatile Demand for Its Imprintables

We think Gildan Activewear lacks a moat, which has put it in a difficult position as it navigates a choppy demand environment for its core imprintables. Although Gildan has leading share in the U.S. printwear channel, this is a market characterized by limited branding and product differentiation, no switching costs, and low prices. In its smaller hosiery and underwear segment, the company has had a private-label men’s underwear contract with wide-moat Walmart since 2019 and rolled out some new offerings in 2023. However, we believe this product has largely replaced Gildan’s branded basics. We think narrow-moat Hanesbrands and Fruit of the Loom have stronger innerwear brands, allowing them to hold significant shelf space at Walmart, no-moat Target, and other key retailers for these products. Indeed, Gildan no longer reports branded apparel as a separate business segment and recorded an impairment to goodwill related to its hosiery in 2020. It acknowledges market share losses to private-label brands, especially in socks, and its hosiery and underwear sales were only 15% of its total sales in 2022, down from 26% in 2017.

Price vs Fair Value

GIL is trading within a range we consider fairly valued.
Price
$35.79
Fair Value
$17.40
Uncertainty
Medium
1-Star Price
$16.72
5-Star Price
$94.47
Economic Moat
Cxl
Capital Allocation
Hcwpbqmx

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
$35.79
Day Range
$35.6036.30
52-Week Range
$26.3036.30
Bid/Ask
$14.50 / $37.33
Market Cap
$6.24 Bil
Volume/Avg
620,810 / 498,119

Key Statistics

Price/Earnings (Normalized)
13.88
Price/Sales
2.03
Dividend Yield
2.08%
Dividend Yield (Forward)
2.08%
Total Yield
5.74%

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 Growth
Total Number of Employees
51,000

Competitors

Valuation

Metric
GIL
UAA
HBI
Price/Earnings (Normalized)
13.8812.8437.19
Price/Book Value
3.151.724.74
Price/Sales
2.030.640.22
Price/Cash Flow
10.348.1339.24
Price/Earnings
GIL
UAA
HBI

Financial Strength

Metric
GIL
UAA
HBI
Quick Ratio
0.761.140.55
Current Ratio
2.502.241.57
Interest Coverage
10.1560.890.85
Quick Ratio
GIL
UAA
HBI

Profitability

Metric
GIL
UAA
HBI
Return on Assets (Normalized)
12.41%9.16%0.51%
Return on Equity (Normalized)
22.98%22.64%8.03%
Return on Invested Capital (Normalized)
16.15%12.90%5.08%
Return on Assets
GIL
UAA
HBI

Apparel Manufacturing Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
HMRZF
Hennes & Mauritz AB Class BLqrmwr$27.5 Bil
HNNMY
Hennes & Mauritz AB ADRXccngz$27.5 Bil
MONRY
Moncler SpA ADRJpbk$15.2 Bil
RL
Ralph Lauren Corp Class ATlqyhy$8.4 Bil
VFC
VF CorpWzyxt$6.7 Bil
PVH
PVH CorpBwqg$5.5 Bil
UAA
Under Armour Inc AYghj$3.5 Bil
UA
Under Armour Inc Class CDxvfs$3.5 Bil
HBI
Hanesbrands IncNgjyy$1.3 Bil