Head to Head Review: Culp (NYSE:CULP) vs. Gildan Activewear (NYSE:GIL)

Culp (NYSE:CULP) and Gildan Activewear (NYSE:GIL) are both consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, dividends, risk and earnings.

Earnings and Valuation

This table compares Culp and Gildan Activewear”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Culp	$203.48 million	0.23	-$19.10 million	($0.81)	-4.63
Gildan Activewear	$3.62 billion	2.48	$398.88 million	$0.52	93.13

Gildan Activewear has higher revenue and earnings than Culp. Culp is trading at a lower price-to-earnings ratio than Gildan Activewear, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

75.1% of Culp shares are held by institutional investors. Comparatively, 82.8% of Gildan Activewear shares are held by institutional investors. 7.9% of Culp shares are held by company insiders. Comparatively, 2.0% of Gildan Activewear shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Culp and Gildan Activewear’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Culp	-5.24%	-12.53%	-5.70%
Gildan Activewear	1.28%	21.03%	7.07%

Analyst Recommendations

This is a breakdown of current recommendations for Culp and Gildan Activewear, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Culp	1	1	0	0	1.50
Gildan Activewear	0	3	12	0	2.80

Gildan Activewear has a consensus price target of $80.00, suggesting a potential upside of 65.19%. Given Gildan Activewear’s stronger consensus rating and higher probable upside, analysts plainly believe Gildan Activewear is more favorable than Culp.

Volatility and Risk

Culp has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, Gildan Activewear has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.

Dividends

Culp pays an annual dividend of $0.46 per share and has a dividend yield of 12.3%. Gildan Activewear pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Culp pays out -56.8% of its earnings in the form of a dividend. Gildan Activewear pays out 192.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gildan Activewear has raised its dividend for 2 consecutive years. Culp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Gildan Activewear beats Culp on 13 of the 17 factors compared between the two stocks.

About Culp

Culp, Inc. manufactures, sources, markets, and sells mattress fabrics, sewn covers, and cut and sewn kits for use in mattresses, foundations, and other bedding products in the United States, North America, the Far East, Asia, and internationally. It operates in two segments, Mattress Fabrics and Upholstery Fabrics. The Mattress Fabrics segment offers woven jacquard, knitted, and converted fabrics for use in the production of bedding products, including mattresses, box springs, foundations, and top of bed components. The Upholstery Fabrics segment provides jacquard woven fabrics, velvets, micro denier suedes, woven dobbies, knitted fabrics, piece-dyed woven products, and polyurethane fabrics for use in the production of residential and commercial upholstered furniture, such as sofas, recliners, loveseats, chairs, sectionals, and sofa-beds, as well as office seating and window treatment products; and installation services for customers in the hospitality and commercial industries. Culp, Inc. was incorporated in 1972 and is headquartered in High Point, North Carolina.

About Gildan Activewear

Gildan Activewear Inc. manufactures and sells various apparel products in the United States, North America, Europe, Asia-Pacific, and Latin America. It provides various activewear products, including T-shirts, fleece tops and bottoms, and sports shirts under the Gildan, Gildan Performance, Gildan Hammer, Glidan Softstyle, Gildan Heavy Cotton, Gildan Ultra Cotton, Gildan DryBlend, Gildan HeavyBlend, Comfort Colors, and American Apparel brands. The company also offers hosiery products comprising athletic; dress; and casual, liner, therapeutic, and workwear socks under the Gildan, Under Armour, GoldToe, Signature Gold by Goldtoe, Peds, MediPeds, All Pro, and GoldTeo Edition TM brands. In addition, it provides men's and boys' underwear products, and ladies panties under the Gildan and Gildan Platinum brands. The company sells its products to wholesale distributors, screen printers, and embellishers, as well as to retailers and lifestyle brand companies. The company was formerly known as Textiles Gildan Inc. and changed its name to Gildan Activewear Inc. in March 1995. Gildan Activewear Inc. was founded in 1946 and is headquartered in Montreal, Canada.