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Gildan Activewear Inc GIL

Morningstar Rating
CAD 48.81 +0.01 (0.02%)
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Company Report

No-Moat Gildan Is Investing in Operations Amid a Tumultuous Proxy Battle

We think Gildan Activewear lacks a moat. Although the firm has leading share in the US 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. Gildan acknowledges market share losses to private-label brands, especially in socks, and its hosiery and underwear sales were only 16.5% of its total sales in 2023, down from 25.7% in 2017.

Price vs Fair Value

GIL is trading within a range we consider fairly valued.
Price
CAD 48.80
Fair Value
CAD 39.40
Uncertainty
Medium
1-Star Price
CAD 24.61
5-Star Price
CAD 26.62
Economic Moat
Kqy
Capital Allocation
Qbmmbqhz

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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News

Trading Information

Previous Close Price
CAD 48.80
Day Range
CAD 48.5449.52
52-Week Range
CAD 36.4252.80
Bid/Ask
CAD 48.68 / CAD 48.95
Market Cap
CAD 8.23 Bil
Volume/Avg
363,527 / 320,904

Key Statistics

Price/Earnings (Normalized)
12.84
Price/Sales
1.97
Dividend Yield (Trailing)
2.17%
Dividend Yield (Forward)
3.13%
Total Yield
7.91%

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 US.
Sector
Consumer Cyclical
Industry
Apparel Manufacturing
Stock Style Box
Mid Core
Total Number of Employees
44,000

Competitors

Valuation

Metric
GIL
UAA
HBI
Price/Earnings (Normalized)
12.8410.6549.52
Price/Book Value
3.161.355.14
Price/Sales
1.970.530.32
Price/Cash Flow
9.896.9763.18
Price/Earnings
GIL
UAA
HBI

Financial Strength

Metric
GIL
UAA
HBI
Quick Ratio
0.781.180.51
Current Ratio
2.382.131.59
Interest Coverage
9.6177.120.88
Quick Ratio
GIL
UAA
HBI

Profitability

Metric
GIL
UAA
HBI
Return on Assets (Normalized)
6.69%5.88%0.33%
Return on Equity (Normalized)
12.43%14.17%5.66%
Return on Invested Capital (Normalized)
9.65%8.23%4.80%
Return on Assets
GIL
UAA
HBI
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Apparel Manufacturing Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
HMRZF
Hennes & Mauritz AB Class BTpzpzz$28.3 Bil
HNNMY
Hennes & Mauritz AB ADRMfzgfv$28.3 Bil
MONRF
Moncler SpALhjtzk$18.5 Bil
RL
Ralph Lauren Corp Class ABnbbkzzNmvsts$10.6 Bil
PVH
PVH CorpChkghmqpCxx$6.3 Bil
GIL
Gildan Activewear IncCtcjldplGslg$6.0 Bil
VFC
VF CorpQljnlyfGstftg$4.8 Bil
UA
Under Armour Inc Class CPlzccjnzzTnzqb$3.0 Bil
UAA
Under Armour Inc Class AGdstzygqqXxqnm$2.9 Bil
HBI
Hanesbrands IncRlscztqrHtfcb$1.7 Bil

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