Since September 2020, the S&P 500 has delivered a total return of 95.4%. But one standout stock has more than doubled the market - over the past five years, Kontoor Brands has surged 209% to $77.24 per share. Its momentum hasn’t stopped as it’s also gained 28.6% in the last six months thanks to its solid quarterly results, beating the S&P by 11.1%.

Is now the time to buy Kontoor Brands, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

Why Is Kontoor Brands Not Exciting?

We’re happy investors have made money, but we're sitting this one out for now. Here are three reasons we avoid KTB and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Kontoor Brands’s sales grew at a sluggish 4.3% compounded annual growth rate over the last five years. This fell short of our benchmark for the consumer discretionary sector.

2. Constant Currency Revenue Hits a Standstill

Investors interested in Apparel and Accessories companies should track constant currency revenue in addition to reported revenue. This metric excludes currency movements, which are outside of Kontoor Brands’s control and are not indicative of underlying demand.

Over the last two years, Kontoor Brands failed to grow its constant currency revenue. This performance was underwhelming and implies there may be increasing competition or market saturation. It also suggests Kontoor Brands might have to lower prices or invest in product improvements to accelerate growth, factors that can hinder near-term profitability.

3. New Investments Fail to Bear Fruit as ROIC Declines

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Kontoor Brands’s ROIC has decreased over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Final Judgment

Kontoor Brands isn’t a terrible business, but it doesn’t pass our bar. With its shares beating the market recently, the stock trades at 14.2× forward P/E (or $77.24 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are more exciting stocks to buy at the moment. Let us point you toward our favorite semiconductor picks and shovels play.

High-Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.