Strong Cash Yield: Is Kontoor Brands Stock A Buy?

Kontoor Brands (KTB) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market

What Is Happening With KTB

KTB may be down -25% so far this year but is now trading at P/S (Price-to-Sales) ratio that is at a meaningful discount to its 3-month and 2-year highs, and also belowits 3-year average.

The stock may not reflect it yet, but here is what’s going well for the company. Kontoor Brands broadened its portfolio with the Helly Hansen acquisition in Q2 2025, which contributed significantly to revenue and diversified its offerings. Wrangler continues to gain market share, marking its fourteenth consecutive quarter of gains, driven by strong product performance and an 11% increase in U.S. direct-to-consumer sales in Q3. While Lee’s overall revenue faced headwinds from China, its U.S. digital sales grew 15% in Q3, supported by a new brand equity campaign. Management raised its full-year 2025 revenue guidance to the high end of $3.09-$3.12 billion, projecting 19-20% growth, and expects to mitigate tariff impacts through strategic pricing and sourcing.

KTB Has Good Fundamentals

• Good Cash Yield: Not many stocks offer free cash flow yield of 6.5%, but Kontoor Brands stock does
• Strong Margin: Last 12 month operating margin of 10.6%
• Growth: Last 12 revenue growth of 9.9% – low growth, but this selection is all about high yield and margin
• Valuation: KTB stock currently trading at 33% below 2Y high, 20% below 1M high, and at a PS lower than 3Y average.

Below is a quick comparison of KTB fundamentals with S&P medians.

*LTM: Last Twelve Months

But What Is The Risk Involved?

While KTB stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. KTB slid about 67% during the Covid pandemic and dropped over 50% in the inflation shock. Those are big hits, especially considering the different nature of these crises. Even with solid fundamentals, the stock hasn’t been immune to major pullbacks. It shows that no matter how strong the setup looks, risk remains — sharp downturns can still happen when the broader market dives. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read KTB Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

For more details and our view, see Buy or Sell KTB Stock.

Stocks Like KTB

Not ready to act on KTB? Consider these alternatives:

1. GLOBALFOUNDRIES (GFS)
2. Ryan Specialty (RYAN)
3. Vail Resorts (MTN)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Dipped last month & meaningfully below 2Y high
3. Current P/S < last few year average
4. Strong operating margin with no instances of large margin collapse
5. High free cash flow yield

A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:

• Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
• Win rate (percentage of picks returning positive) of about 74% for 12-month period
• Strategy consistent across market cycles

Why Stock Pickers Win More With Multi Asset Portfolios

Single markets are unpredictable but different assets react differently. A multi asset portfolio cuts downside shocks while keeping upside on the table.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices