Financial Analysis: Swatch Group (OTCMKTS:SWGAY) versus Kontoor Brands (NYSE:KTB)

Kontoor Brands (NYSE:KTB) and Swatch Group (OTCMKTS:SWGAY) are both consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Profitability

This table compares Kontoor Brands and Swatch Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kontoor Brands	8.21%	59.71%	12.94%
Swatch Group	N/A	N/A	N/A

Risk & Volatility

Kontoor Brands has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, Swatch Group has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500.

Insider and Institutional Ownership

93.1% of Kontoor Brands shares are held by institutional investors. 1.8% of Kontoor Brands shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Kontoor Brands and Swatch Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kontoor Brands	1	4	6	1	2.58
Swatch Group	0	4	1	0	2.20

Kontoor Brands currently has a consensus price target of $95.00, indicating a potential upside of 14.85%. Given Kontoor Brands’ stronger consensus rating and higher probable upside, research analysts clearly believe Kontoor Brands is more favorable than Swatch Group.

Earnings and Valuation

This table compares Kontoor Brands and Swatch Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kontoor Brands	$3.15 billion	1.43	$227.45 million	$4.79	17.27
Swatch Group	$7.58 billion	3.63	$3.62 million	N/A	N/A

Kontoor Brands has higher earnings, but lower revenue than Swatch Group.

Dividends

Kontoor Brands pays an annual dividend of $2.12 per share and has a dividend yield of 2.6%. Swatch Group pays an annual dividend of $0.13 per share and has a dividend yield of 1.1%. Kontoor Brands pays out 44.3% of its earnings in the form of a dividend. Kontoor Brands has increased its dividend for 1 consecutive years. Kontoor Brands is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Kontoor Brands beats Swatch Group on 13 of the 16 factors compared between the two stocks.

About Kontoor Brands

Kontoor Brands, Inc., a lifestyle apparel company, designs, produces, procures, markets, distributes, and licenses denim, apparel, footwear, and accessories, primarily under the Wrangler and Lee brands. The company operates through two segments: Wrangler and Lee. It licenses and sells apparel under the Rock & Republic brand name. The company sells its products primarily through mass merchants, specialty stores, mid-tier and traditional department stores, company-operated stores, and online. It operates in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific regions. Kontoor Brands, Inc. was incorporated in 2018 and is headquartered in Greensboro, North Carolina.

About Swatch Group

The Swatch Group AG designs, manufactures, and sells finished watches, jewelry, and watch movements and components worldwide. The company operates through Watches & Jewelry and Electronic Systems segments. The Watches & Jewelry segment designs, produces, and commercializes watches and jewelry. The Electronic Systems segment engages in the design, production, and commercialization of electronic components, as well as sports timing activities. It is also involved in the provision of assembly, research and development, administration, polishing, logistics and distribution, and customer services; and hard material products, microelectronics, watch cases and crowns, miniature low-frequency quartz crystals, thin wires, miniature batteries, watch dials, watch hands, bracelets, sports timing technology and equipment, precision parts, and assembly electronic components. In addition, the company engages in retail, communication, real estate, real estate management, finance, reinsurance, and art center businesses. It offers its watch and jewelry products primarily under the Breguet, Harry Winston, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, Omega, Longines, Rado, Union Glashütte, Tissot, Balmain, Certina, Mido, Hamilton, Swatch, and Flik Flak brands. The Swatch Group AG was founded in 1983 and is headquartered in Biel/Bienne, Switzerland.