Results: Kontoor Brands, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

A week ago, Kontoor Brands, Inc. (NYSE:KTB) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of US$607m arriving 2.3% ahead of forecasts. Statutory earnings per share (EPS) were US$0.92, 6.1% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Kontoor Brands

Taking into account the latest results, Kontoor Brands' six analysts currently expect revenues in 2024 to be US$2.61b, approximately in line with the last 12 months. Per-share earnings are expected to increase 4.8% to US$4.51. In the lead-up to this report, the analysts had been modelling revenues of US$2.60b and earnings per share (EPS) of US$4.62 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 6.4% to US$78.71, suggesting that these impacts are not expected to weigh on the stock's value in the long term. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Kontoor Brands at US$88.00 per share, while the most bearish prices it at US$59.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Kontoor Brands' growth to accelerate, with the forecast 3.7% annualised growth to the end of 2024 ranking favourably alongside historical growth of 2.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 5.7% annually. So it's clear that despite the acceleration in growth, Kontoor Brands is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Kontoor Brands. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Kontoor Brands analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Kontoor Brands you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com