Kontoor Brands, Inc. ( KTB ) was spun off from V.F. Corporation ( VFC ) in 2019 because it was a non-core business for the latter. KTB today is an apparel company centered on theAlways on the hunt for undervalued, promising stocks with a focus on risk and reward. Limited risks and decent to high upside by knowing what one's owning. I strongly believe that the best investment ideas are often the simplest. If contrarian, the better.Analyst’s Disclosure: I/we have no stock, option or similar derivative positio ...

Core Insights - Kontoor Brands (KTB) was spun off from V.F. Corporation (VFC) in 2019 as it was considered a non-core business for VFC [1] Company Overview - KTB is an apparel company that focuses on iconic brands [1] Investment Perspective - The company is viewed as an opportunity for investors seeking undervalued stocks with a focus on risk and reward [1] - There is a belief that the best investment ideas are often the simplest, and contrarian approaches may yield better results [1]

Core Insights - Kontoor Brands (KTB) experienced a significant stock price increase of 57.3% following the Q2 FY2025 earnings release, but has since lost investor appeal despite strong Q3 FY2025 performance and an earnings beat [1] Financial Performance - The company reported solid Q3 FY2025 numbers, indicating strong operational performance [1] Investment Perspective - The article emphasizes a value investing approach focused on long-term growth, highlighting the importance of strong fundamentals and sustainable competitive advantages [1]

Core Insights - Goody, a leading hair accessories brand, has launched a limited-edition collection in collaboration with Lee, marking Lee's first entry into the hair and beauty market [1][2] - The collection features 20 items, including hairbrushes, hair ties, headbands, scrunchies, claw clips, and bows, all inspired by American denim style [2] - The collection is exclusively available at Walmart, Walmart.com, and Lee.com, with prices ranging from $5.94 to $12.94, making it an affordable option for consumers [2][3] Company Overview - Goody has been a leader in the hair accessory market since its founding in 1907, known for its 'ouchless' hair accessories that allow for personal style expression without damaging hair [4] - Lee, a brand under Kontoor Brands (NYSE: KTB), has a 135-year history in designing denim and workwear, appealing to a global audience with products sold in over 100 countries [4] - Lee's focus on trend-right and timeless styles, along with its integration into pop culture through collaborations, aims to attract a new generation of fans [4]

Core Viewpoint - Kontoor Brands (KTB) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements, making it a valuable tool for investors [2][4]. - An increase in earnings estimates typically leads to buying pressure from institutional investors, resulting in stock price movements [4]. Business Improvement Indicators - The upgrade in ratings for Kontoor suggests an improvement in the company's underlying business, which should encourage investors to drive the stock price higher [5]. - Over the past three months, the Zacks Consensus Estimate for Kontoor has increased by 0.8%, reflecting analysts' growing confidence in the company's earnings potential [8]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Kontoor's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Insights - The Federal Reserve cut interest rates for the third time in 2025, leading to a rally in U.S. stocks, which is seen as a relief for investors amid high inflation concerns [2][4] - The Fed is optimistic about inflation slowing to 2.4% and economic growth accelerating to 2.3% by the end of 2026, which is favorable for the broader market [3][7] Consumer Discretionary Stocks - **Brightstar Lottery PLC**: Expected earnings growth rate for the current year is 17.9%, with a Zacks Consensus Estimate improvement of 29.5% over the last 60 days, currently holding a Zacks Rank 2 [8] - **Las Vegas Sands Corp.**: Anticipated earnings growth rate is 30%, with a Zacks Consensus Estimate increase of 10.5% over the last 60 days, currently rated as a Zacks Rank 1 (Strong Buy) [9][10] - **Roku, Inc.**: Projected earnings growth rate exceeds 100%, with a Zacks Consensus Estimate improvement of 83.3% over the past 60 days, currently holding a Zacks Rank 2 [11] - **Kontoor Brands, Inc.**: Expected earnings growth rate is 12.5%, with a slight improvement of 0.7% in the Zacks Consensus Estimate over the last 60 days, currently rated as a Zacks Rank 2 [12]

Core Viewpoint - Kontoor Brands (KTB) shows potential for significant upside, with a mean price target of $96.57 indicating a 28.5% increase from the current price of $75.16 [1] Price Targets and Analyst Estimates - The mean estimate consists of seven short-term price targets with a standard deviation of $13.38, indicating variability among analysts [2] - The lowest estimate is $75.00, suggesting a slight decline of 0.2%, while the highest estimate is $118.00, indicating a potential surge of 57% [2] - Analysts' price targets can be misleading, as empirical research shows they often do not accurately predict stock price movements [7][10] Earnings Estimates and Analyst Agreement - Analysts have shown increasing optimism regarding KTB's earnings, with a strong consensus on higher EPS estimates, which correlates with potential stock price increases [11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has risen by 0.8%, with one estimate moving higher and no negative revisions [12] - KTB holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] Conclusion on Price Movement - While the consensus price target may not be a reliable indicator of the extent of KTB's potential gains, it does provide a useful guide for the direction of price movement [14]

Core Insights - The holiday sales season for 2025-26 in the U.S. has begun, with Thanksgiving and Black Friday being critical days for consumer spending, which is a key indicator of economic conditions and consumer behavior [2][3] Company Summaries Crocs Inc. (CROX) - Crocs has a Zacks Rank of 1 and has seen significant growth in brand awareness through collaborations and product innovations, appealing to a broad demographic [8] - The company is refreshing its product lines and has upcoming launches that are generating consumer interest, with an expected revenue growth rate of 0.4% and earnings growth rate of 3.9% for the next year [11] - The short-term average price target for Crocs represents an increase of 11.2% from its last closing price of $83.07 [11] On Holding AG (ONON) - On Holding also holds a Zacks Rank of 1, providing innovative footwear and sports apparel, with an expected revenue growth rate of 21.2% and earnings growth rate of 79.8% for the next year [12][13] - The short-term average price target for On Holding indicates a potential increase of 45.3% from its last closing price of $41.78 [13] Ralph Lauren Corp. (RL) - Ralph Lauren has a Zacks Rank of 2 and has outperformed the industry, driven by its strategic "Next Great Chapter: Accelerate Plan" focusing on brand elevation and operational agility [14][16] - The company is investing in digital transformation, enhancing consumer engagement, with an expected revenue growth rate of 9.5% and earnings growth rate of 25% for the current year [17] - The short-term average price target for Ralph Lauren suggests a 3.3% increase from its last closing price of $364.50 [17] Kontoor Brands Inc. (KTB) - Kontoor Brands, with a Zacks Rank of 2, is a lifestyle apparel company with an expected revenue growth rate of 11.3% and earnings growth rate of 5.3% for the next year [18][19] - The short-term average price target for Kontoor Brands indicates a potential increase of 31% from its last closing price of $73.69 [19] Boot Barn Holdings Inc. (BOOT) - Boot Barn Holdings has a Zacks Rank of 2 and operates in the lifestyle retail sector, with an expected revenue growth rate of 16.2% and earnings growth rate of 20.5% for the current year [20][22] - The short-term average price target for Boot Barn suggests a 15% increase from its last closing price of $195.76 [22] Industry Insights - The Zacks Retail – Apparel and Shoes industry is currently ranked in the top 26% of Zacks Industry Rank, indicating a favorable outlook compared to the broader market [7] - Consumer confidence is under pressure due to macroeconomic uncertainties, leading to a shift towards value-driven purchases, impacting demand in the apparel and footwear sectors [5][6]

Core Insights - The holiday sales season for 2025-26 in the U.S. is crucial, with Thanksgiving and Black Friday being key days for consumer spending [2] - Despite a challenging economic environment, holiday sales are expected to grow, albeit at a muted rate, leading to recommendations for five apparel and shoe stocks with strong short-term upside potential [3][10] Industry Overview - Consumer spending is the largest component of U.S. GDP, and the holiday season represents the peak period for this spending [3] - The apparel and footwear industry is facing challenges as consumers shift towards value-driven purchases, impacting demand [6] - The Zacks Retail – Apparel and Shoes industry ranks in the top 26% of Zacks Industry Rank, indicating potential for outperformance in the next three to six months [7] Company Highlights Crocs Inc. (CROX) - Crocs has a Zacks Rank of 1 and is experiencing significant growth in brand awareness through collaborations and product innovations [11] - The company is refreshing its product lines and has an expected revenue growth rate of 0.4% and earnings growth rate of 3.9% for the next year [14] - The short-term average price target for CROX indicates an 11.2% increase from its last closing price of $83.07 [14] On Holding AG (ONON) - On Holding also holds a Zacks Rank of 1, focusing on ultralight footwear and sports apparel [15] - The expected revenue growth rate is 21.2% and earnings growth rate is 79.8% for the next year [16] - The short-term average price target suggests a 45.3% increase from the last closing price of $41.78 [16] Ralph Lauren Corp. (RL) - Ralph Lauren has a Zacks Rank of 2 and has outperformed the industry due to its strategic "Next Great Chapter: Accelerate Plan" [17] - The company is investing in digital transformation, with expected revenue growth of 9.5% and earnings growth of 25% for the current year [20] - The short-term average price target indicates a 3.3% increase from the last closing price of $364.50 [20] Kontoor Brands Inc. (KTB) - Kontoor Brands, with a Zacks Rank of 2, operates lifestyle apparel brands like Wrangler and Lee [22] - The expected revenue growth rate is 11.3% and earnings growth rate is 5.3% for the next year [23] - The short-term average price target suggests a 31% increase from the last closing price of $73.69 [23] Boot Barn Holdings Inc. (BOOT) - Boot Barn Holdings has a Zacks Rank of 2 and focuses on western and work-related footwear and apparel [24] - The expected revenue growth rate is 16.2% and earnings growth rate is 20.5% for the current year [25] - The short-term average price target indicates a 15% increase from the last closing price of $195.76 [25]

Core Insights - Investors are evaluating Kontoor Brands (KTB) and Cintas (CTAS) for potential undervalued stock opportunities [1] Group 1: Zacks Rank and Earnings Outlook - KTB has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while CTAS has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank emphasizes recent positive revisions to earnings estimates, suggesting KTB's improving earnings outlook [3] Group 2: Valuation Metrics - KTB's forward P/E ratio is 12.59, significantly lower than CTAS's forward P/E of 38.01 [5] - KTB has a PEG ratio of 1.57, while CTAS has a PEG ratio of 3.17, indicating KTB is more favorably valued in terms of expected earnings growth [5] - KTB's P/B ratio is 7.27 compared to CTAS's P/B of 15.55, further highlighting KTB's relative valuation advantage [6] Group 3: Value Grades - KTB holds a Value grade of B, while CTAS has a Value grade of F, indicating KTB is currently the superior value option based on various valuation metrics [6]