Kontoor Brands, Inc. (NYSE:KTB), is not the largest company out there, but it saw a significant share price rise of 21% in the past couple of months on the NYSE. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Kontoor Brands’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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Is Kontoor Brands Still Cheap?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.27x is currently trading slightly below its industry peers’ ratio of 14.63x, which means if you buy Kontoor Brands today, you’d be paying a reasonable price for it. And if you believe Kontoor Brands should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, it seems like Kontoor Brands’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

See our latest analysis for Kontoor Brands

What does the future of Kontoor Brands look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Kontoor Brands, it is expected to deliver a negative earnings growth of -0.3%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? KTB seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on KTB, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on KTB for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on KTB should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Kontoor Brands, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Kontoor Brands (1 makes us a bit uncomfortable) you should be familiar with.

If you are no longer interested in Kontoor Brands, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.