Kontoor Brands (KTB) Stock Is Up, What You Need To Know

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official bolstered hopes for an interest rate cut. 

New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Apparel and Accessories company Kontoor Brands jumped 2.9%. Is now the time to buy Kontoor Brands? Access our full analysis report here, it’s free for active Edge members.
• Apparel and Accessories company Under Armour jumped 2.9%. Is now the time to buy Under Armour? Access our full analysis report here, it’s free for active Edge members.
• Specialized Consumer Services company LKQ jumped 3%. Is now the time to buy LKQ? Access our full analysis report here, it’s free for active Edge members.

Zooming In On LKQ (LKQ)

LKQ’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 22 days ago when the stock gained 6.2% on the news that it reported third-quarter profits that significantly beat Wall Street's expectations, overshadowing a slight revenue miss and a cut to its full-year guidance. The vehicle components provider posted adjusted earnings of 84 cents per share, which was well ahead of the average analyst estimate of 76 cents. Revenue for the period came in at $3.50 billion, just missing the $3.53 billion consensus. Despite management lowering its full-year adjusted profit guidance to a midpoint of $3.08 per share, investors appeared to focus on the strong bottom-line outperformance in the quarter. The 11% earnings beat demonstrated better-than-expected profitability, which was enough to send the shares higher even with the mixed overall report.

LKQ is down 18.4% since the beginning of the year, and at $29.58 per share, it is trading 32.9% below its 52-week high of $44.05 from March 2025. Investors who bought $1,000 worth of LKQ’s shares 5 years ago would now be looking at an investment worth $824.97.

What Happened?

A number of stocks jumped in the afternoon session after investors continued to pile into value-oriented names amid growing valuation concerns. This shift reflected growing caution over high valuations within the technology and artificial intelligence (AI) spheres. As market participants reassessed risk, they reallocated capital from growth-heavy indices, like the Nasdaq, to companies in areas like industrials and financials, perceived to be more reasonably priced.Contributing to the positive momentum, markets remained hopeful that a prolonged 40-day government shutdown would be over.The U.S. Senate approved a compromise funding package, which was pending a vote in the House. The potential end to the shutdown brought a sense of relief to markets.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Apparel and Accessories company PVH jumped 4%. Is now the time to buy PVH? Access our full analysis report here, it’s free for active Edge members.
• Apparel and Accessories company Under Armour jumped 3.3%. Is now the time to buy Under Armour? Access our full analysis report here, it’s free for active Edge members.
• Apparel and Accessories company Kontoor Brands jumped 2.8%. Is now the time to buy Kontoor Brands? Access our full analysis report here, it’s free for active Edge members.
• Apparel and Accessories company Oxford Industries jumped 2.7%. Is now the time to buy Oxford Industries? Access our full analysis report here, it’s free for active Edge members.
• Travel and Vacation Providers company Hilton Grand Vacations jumped 3%. Is now the time to buy Hilton Grand Vacations? Access our full analysis report here, it’s free for active Edge members.

Zooming In On PVH (PVH)

PVH’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 22 days ago when the stock gained 3.8% on the news that BTIG initiated coverage on the stock with a 'buy' rating. The analyst firm set a price target of $100.00, which suggested a potential upside of 22.19% within a year. This positive view of the company was shared by others in the apparel sector. Separately, Raymond James upgraded peer company Capri Holdings from 'Market Perform' to 'Outperform', signaling broader positive sentiment within the industry.

PVH is down 23.9% since the beginning of the year, and at $79.84 per share, it is trading 29.3% below its 52-week high of $112.86 from December 2024. Investors who bought $1,000 worth of PVH’s shares 5 years ago would now be looking at an investment worth $1,221.

Kontoor Brands’ third quarter saw revenue growth in line with Wall Street expectations, but the market responded negatively, reflecting investor concerns about profitability and cost headwinds. Management attributed the quarter’s results to strong contributions from Helly Hansen, ongoing market share gains for Wrangler, and proactive steps to address challenges in the Lee segment, particularly in China. CEO Scott Baxter noted, “Our third quarter results highlight the power of our expanded brand portfolio,” while acknowledging that lower operating margins and a shift in shipment timing affected the overall performance.

Is now the time to buy KTB? Find out in our full research report (it’s free for active Edge members).

Kontoor Brands (KTB) Q3 CY2025 Highlights:

• Revenue: $853.2 million vs analyst estimates of $857.1 million (27.3% year-on-year growth, in line)
• Adjusted EPS: $1.44 vs analyst estimates of $1.40 (3.2% beat)
• Adjusted EBITDA: $134.3 million vs analyst estimates of $125.4 million (15.7% margin, 7.1% beat)
• The company reconfirmed its revenue guidance for the full year of $3.11 billion at the midpoint
• Management slightly raised its full-year Adjusted EPS guidance to $5.50 at the midpoint
• Operating Margin: 7.5%, down from 14.7% in the same quarter last year
• Constant Currency Revenue rose 27% year on year (2% in the same quarter last year)
• Market Capitalization: $4.01 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Kontoor Brands’s Q3 Earnings Call

• Irwin Boruchow (Wells Fargo) sought details on the impact of shipment timing shifts at Wrangler; CFO Joseph Alkire explained that demand was solid but order flow moved into Q4, with October organic growth running slightly ahead of plan.
• Robert Drbul (BTIG) asked about pricing actions and competitive dynamics; Alkire said pricing strategies were coordinated with retail partners to address tariffs, and CEO Baxter added the brands remain competitively positioned across markets.
• Jonathan Komp (Baird) questioned the confidence behind organic revenue growth guidance and inventory planning. Baxter emphasized broad-based brand strength and digital momentum, while Alkire described inventory increases as temporary and linked to supply chain transformation.
• Brooke Roach (Goldman Sachs) inquired about Project Jeanius savings realization; Alkire stated $50 million in gross savings are embedded in 2025 expectations, with full run-rate savings expected in 2026 and a portion reinvested.
• Laurent Vasilescu (BNP Paribas) pressed for clarity on Lee’s path to growth and the timing of synergy realization. Baxter and Alkire suggested Lee may stabilize and return to growth by late 2026, with most Helly Hansen synergies realized in 2026.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will focus on (1) Helly Hansen’s ability to accelerate growth in the U.S. and Asia, (2) the pace at which Project Jeanius delivers operational savings and margin improvements, and (3) signs of stabilization and sequential improvement in Lee’s performance, particularly in China and the U.S. Execution against these milestones will help determine Kontoor Brands’ ability to offset ongoing cost headwinds and deliver on its deleveraging targets.

Kontoor Brands currently trades at $72.18, down from $81.01 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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