Gildan Activewear (NYSE: GIL) and Differential Brands Group (NASDAQ:DFBG) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, profitability, institutional ownership, risk, analyst recommendations, earnings and valuation.

Profitability

This table compares Gildan Activewear and Differential Brands Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gildan Activewear 14.16% 18.65% 12.68%
Differential Brands Group -8.79% -23.53% -6.57%

Insider & Institutional Ownership

77.2% of Gildan Activewear shares are owned by institutional investors. Comparatively, 1.7% of Differential Brands Group shares are owned by institutional investors. 62.5% of Differential Brands Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Gildan Activewear pays an annual dividend of $0.37 per share and has a dividend yield of 1.2%. Differential Brands Group does not pay a dividend. Gildan Activewear pays out 22.4% of its earnings in the form of a dividend. Differential Brands Group has increased its dividend for 4 consecutive years.

Earnings and Valuation

This table compares Gildan Activewear and Differential Brands Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gildan Activewear $2.68 billion 2.53 $567.29 million $1.65 18.26
Differential Brands Group $155.65 million 0.16 $3.42 million ($1.06) -1.79

Gildan Activewear has higher revenue and earnings than Differential Brands Group. Differential Brands Group is trading at a lower price-to-earnings ratio than Gildan Activewear, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings for Gildan Activewear and Differential Brands Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gildan Activewear 0 6 4 0 2.40
Differential Brands Group 0 0 1 0 3.00

Gildan Activewear presently has a consensus target price of $35.33, indicating a potential upside of 17.27%. Differential Brands Group has a consensus target price of $5.00, indicating a potential upside of 163.16%. Given Differential Brands Group’s stronger consensus rating and higher possible upside, analysts clearly believe Differential Brands Group is more favorable than Gildan Activewear.

Risk and Volatility

Gildan Activewear has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500. Comparatively, Differential Brands Group has a beta of -1.72, indicating that its share price is 272% less volatile than the S&P 500.

Summary

Gildan Activewear beats Differential Brands Group on 11 of the 16 factors compared between the two stocks.

About Gildan Activewear

Gildan Activewear Inc. is a manufacturer and marketer of branded basic family apparel, including T-shirts, fleece, sport shirts, underwear, socks, hosiery and shapewear. The Company operates through two segments: Printwear and Branded Apparel. The Printwear segment designs, manufactures, sources, markets, and distributes undecorated activewear products. The Branded Apparel segment designs, manufactures, sources, markets, and distributes branded family apparel, which includes athletic, casual and dress socks, underwear, activewear, sheer hosiery, legwear, and shapewear products, which are sold to retailers in the United States and Canada. The Company sells its products under various brands, including the Gildan, Gold Toe, Anvil, Comfort Colors, American Apparel, Alstyle, Secret, Silks, Kushyfoot, Secret Silky, Therapy Plus, Peds, and MediPeds brands. The Company distributes its products in printwear markets in the United States, Canada, Mexico, Europe, Asia-Pacific and Latin America.

About Differential Brands Group

Differential Brands Group Inc., formerly Joe’s Jeans Inc., is engaged in the design, development and marketing of apparel products, which include denim jeans, related casual wear and accessories. The Company offers its products under various brands, such as Hudson, Robert Graham and SWIMS. Its segments are Wholesale and Retail. Its Wholesale segment consists of sales of Hudson products to retailers, specialty stores and international distributors. Its Retail segment consists of sales of its products to consumers through its retail Internet sites for Hudson products. The Hudson product line includes women’s, men’s and children’s denim jeans, pants and other bottoms. The Robert Graham product line includes men’s sport shirts, pants, sweaters, knits, t-shirts, sportcoats, outerwear and swimwear. Through SWIMS brand, it distributes a range of footwear, swimwear, outerwear, ready-to-wear and accessories across the world through department stores, independent specialty and luxury resorts.

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