First Read: Kontoor Brands Inc "Lee Divestment Deal Likely a Modestly..."

研报英文原文证据摘录

First Read: Kontoor Brands Inc "Lee Divestment Deal Likely a Modestly..."

Forecast returns

Forecast price appreciation 101.3%

Forecast dividend yield 3.5%

Forecast stock return 104.8%

Market return assumption 9.1%

Forecast excess return 95.7%

Company Description

Kontoor Brands, Inc is a global apparel company that designs, produces, procures, markets,

distributes, and licenses apparel, footwear, and accessories, primarily under its two key

reportable segments: Wrangler and Lee. The company's products are sold in the US through

mass merchants, specialty stores, mid-tier and traditional department stores, company-

operated stores, and online. The company's products are also sold internationally, primarily in

Europe and Asia-Pacific, through department, specialty, company-operated, concession

retail, and independently-operated partnership stores and online.

Valuation Method and Risk Statement

Our price target is derived from a multiple analysis, supported by a DCF valuation as a

validation method. Several downside risks to consider: (1) The health of the consumer. Brands

are reliant on the state of the macro environment and any deterioration in consumer

spending and/ or unemployment could negatively impact sales and margins. (2) Fashion risk/

inability to execute on merchandise strategy. Brands are inherently exposed to fashion risk

due to ongoing shifts in trends and customer preferences. The company's success has hinged

upon its ability to forecast fashion trends and appropriately translate the looks for its target

customer. If it finds itself unable to predict and/ or interpret changes in trends, sales and

margins could suffer. (3) Inventory risk. The company's ability to manage inventory levels is

important to be the health of margins and earnings.