GILDAN ACTIVEWEAR INC. (GIL): what the price assumes
In the published model solve dated 2026-Q2, anchored at $58.11, GILDAN ACTIVEWEAR INC. (GIL) is priced for +16.0% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.
Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/GIL
Headline
| Field | Value |
|---|---|
| Ticker | GIL |
| Company | GILDAN ACTIVEWEAR INC. |
| Sector / Industry | Consumer Cyclical |
| Current price | $58.11/sh |
| Composition | Activewear 85% / Innerwear 15% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 14.7% |
| Operating margin today | 17.1% |
| Margin compression (value-band) | -2.4pp |
| Implied growth | 16.0% |
| Multiple paid | 24x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 8.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.7pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +1.16σ |
| cohort percentile (of 214 peers) | 74 |
| sustained it ~5 years at this level | 43% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.28x | 5 | expensive |
| Earnings | 7.49x | 4 | expensive |
| Relative | 1.49x | 3 | expensive |
| Growth | 1.08x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $53.88 | 1.08x | yes | FCF base $0.5B, growth 6% (input: historical growth), terminal g 4.0%, WACC 7.7%, 6yr projection |
| DCF Exit Multiple | Growth | $57.18 | 1.02x | yes | Exit EV/EBITDA: 17.7x / 19.7x / 21.7x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $42.26 | 1.38x | yes | P/E 22x (static sector reference · 2026-04), scenarios: 18.4x / 22.0x / 25.6x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $23.29 | 2.50x | yes | BV/sh $19.24, ROE (TTM) 11.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $25.53 | 2.28x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $45.20 | 1.29x | yes | Rev $3.6B, growth 6% (input: historical growth; tapered), Terminal P/S: 2.5x / 3.0x / 3.5x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $13.05 | 4.45x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.63B × (1−16%) / WACC 7.7% → EPV (no growth) |
| Residual Income | Asset | $25.96 | 2.24x | yes | BV $19.24 + 5yr PV of (ROE (TTM) 11.2% − Kₑ 9.3%) × BV; BV grows 7.3%/yr |
| Graham Number | Asset | $33.61 | 1.73x | yes | √(22.5 × EPS $2.61 × BVPS $19.24) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $34.36 | 1.69x | yes | EBITDA $0.77B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $5.52 | 10.53x | yes | FCF $499.9M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $3.06 | 18.99x | yes | EPS $2.61 × (8.5 + 2×-3.5%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $16.27 | 3.57x | yes | BV $19.24 × (ROIC 6.5% / WACC 7.7%) |
| P/Sales Sector | Relative | $39.09 | 1.49x | yes | Revenue $3.62B × sector P/S 2.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $28.22 | 2.06x | yes | EPS $2.61 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $4.0b |
| Net debt / NOPAT (after-tax) | 7.77x |
| Net debt / operating income (pre-tax) | 6.50x |
| Share count CAGR (buyback) | -6.1% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
The single most decisive number for Gildan right now is the HanesBrands integration. It is the reason revenue is at a record $1.17 billion, the reason adjusted EPS fell 27% year over year, and the reason buybacks are paused. How that deal turns out flips the entire verdict.
At $51.89 the price implies operating growth of about 12.8% a year for five years, justified by the relative-multiple and growth-DCF lenses while asset and earnings-power lenses call it expensive. The 18.7% trailing operating margin is the manufacturing edge that underpins the bull case.
The risk is leverage and dilution from the Hanes acquisition. Net debt sits near $3.6 billion, the share count rose, and management has paused repurchases until leverage falls back into its target band. The bet is that integration synergies and low-cost manufacturing restore the earnings power.
Bull Case
The one number that decides the Gildan thesis is the operating margin, because it is the proof that the company's low-cost manufacturing model still works at scale. Gildan runs vertically integrated, owned manufacturing for basic apparel, t-shirts, fleece, underwear, and socks, in low-cost locations, and the result is a 18.7% trailing operating margin that few apparel companies can match. That margin is the entire moat: in a commoditized category, the lowest-cost producer wins, and Gildan's owned-factory model gives it a structural cost advantage over competitors who outsource. If that margin holds or expands as the company absorbs HanesBrands, the stock is cheap. If it erodes, nothing else in the thesis matters. Everything turns on that one metric.
The HanesBrands acquisition is the lever that could make the margin story bigger. Q1 2026 was the first full quarter with Hanes included, and Gildan posted record net sales of $1.17 billion, ahead of expectations. Adjusted gross profit reached $385 million, or 33% of sales, up from 31.2% a year earlier, helped by pricing actions, early Hanes integration benefits, and lower raw material and manufacturing costs. The strategic logic is straightforward: take a larger basic-apparel revenue base and run it through Gildan's manufacturing and cost discipline, expanding the margin on a bigger business. The gross-margin expansion in the very first full quarter of integration is the early evidence that the model travels to the acquired volume.
Management is confident enough to reaffirm guidance through the integration noise. Despite the disruption, Gildan reiterated full-year 2026 guidance for $6.0 to $6.2 billion in revenue and adjusted EPS of $4.20 to $4.40. The adjusted EPS decline in Q1, down 27% to $0.43, reflects integration costs and a higher share count, not a broken business, and the figure still beat the $0.39 estimate. Once leverage from the Hanes deal returns to the target range, management intends to resume share buybacks, which on a low-cost-producer earnings base would compound per-share value. The price implies about 12.8% annual operating growth, and roughly half of comparable performers sustain that pace, so the bar is demanding but achievable for a company adding a major acquisition to a proven manufacturing platform. The decisive metric, the margin, is moving the right way.
Bear Case
The qualitative problem with Gildan right now is that it has bet the company on digesting a large, lower-quality acquisition, and the price does not reflect how much can go wrong before that bet pays off. HanesBrands brought scale, but it also brought a tired brand portfolio, integration complexity, and a balance sheet now carrying meaningful debt. The market is pricing Gildan as if the integration is a formality and the combined entity simply earns Gildan's historical margin on a bigger base. Integrations rarely run that cleanly, and a basic-apparel roll-up depends on extracting cost synergies from a business that was underperforming for a reason. The disconnect is between a price that assumes smooth compounding and a reality that involves years of integration risk on a brand portfolio that needs revitalizing.
The numbers underneath make the disconnect concrete. Adjusted EPS fell 27% year over year in Q1 2026 to $0.43, dragged down by integration impacts and a higher share count from the deal. The company carries net debt of roughly $3.6 billion, net debt to operating income around 1.4 times, and it has paused share buybacks entirely until leverage returns to its 1.5 to 2.5 times target band. A capital-return program suspended to pay down acquisition debt is a tangible cost to shareholders: the buyback that compounded per-share value is on hold, and the share count has risen rather than fallen. The growth-DCF and relative lenses justify the price, but the asset-based and earnings-power frames call it expensive, with earnings-power value landing near $18 and FCF yield near $7, both far below the $51.89 (June 27, 2026) quote. The cash-flow methods are skeptical because the current cash generation does not yet support the price; it depends on synergies that have not been realized.
The third issue is the commodity nature of the underlying business. Gildan makes basic apparel, a category with little pricing power, exposure to cotton and input-cost swings, and constant competitive pressure. The 18.7% margin is impressive precisely because the category is so unforgiving, but that means the margin is also the most vulnerable thing in the model. A spike in cotton prices, a tariff change, freight inflation, or a promotional retail environment can compress it quickly, and the entire valuation rests on that margin holding through a complex integration. The price implies 12.8% annual operating growth for five years on a low-margin-category business that is simultaneously absorbing a large acquisition, deleveraging, and unable to buy back stock. That is a lot of execution to underwrite at a price the cash-flow models already consider rich.
Valuation
The inversion frames a demanding but not extreme bet. At $51.89 the market is paying about 22 times company-wide operating income, which at an 8.4% cost of capital implies operating growth of roughly 12.8% a year for five years. The priced-in assumption reads as within range: about 49% of comparable fast-growers have sustained that pace for five years, so it is close to a coin flip historically, and the company's low-cost manufacturing model gives it a credible path. The stretch is in delivering that growth while integrating HanesBrands and deleveraging at the same time.
The model X-ray shows the classic split of a company priced for growth. The relative-multiple and growth-DCF families justify the price (DCF perpetual growth lands near $75, DCF exit multiple near $56, relative valuation near $51, P/sales sector near $47). The asset-based and earnings-power families say expensive (earnings-power value near $18, FCF yield near $7, simple excess return near $28, two-stage excess return near $31). The blended cross-method anchor sits near $51, essentially at the price. The earnings-power skepticism is the signal worth weighing: the cash-flow methods do not yet see the earnings to support the quote, because the current results are depressed by integration costs and the synergies are still ahead.
The balance sheet is the swing factor and currently a constraint. Gildan carries net debt of roughly $3.6 billion against about $2.5 billion of trailing operating income, net debt to operating income near 1.4 times, taken on to fund the HanesBrands acquisition. Buybacks are paused until leverage returns to the 1.5 to 2.5 times target band, removing a lever that historically supported per-share value, and the share count has risen. The Q1 2026 results, record revenue, gross margin up to 33%, but adjusted EPS down 27%, are real and central to the forward view. The reasonable conclusion is that Gildan is a proven low-cost manufacturer making a large, transformative acquisition, priced for the integration to succeed and the margin to hold. The decisive variable is whether the manufacturing edge extends to the acquired volume fast enough to justify a growth multiple while the company pays down debt.
Catalysts
The Q1 2026 report was the most recent catalyst and a mixed one. Gildan posted record net sales of $1.17 billion, the first full quarter with HanesBrands included and ahead of expectations. Adjusted gross profit was $385 million, or 33% of net sales, up from 31.2% a year earlier on pricing actions, Hanes integration, and lower raw material and manufacturing costs. Adjusted diluted EPS was $0.43, down 27% year over year on integration impacts and a higher share count, but ahead of the $0.39 estimate. (Sources: StockTitan 6-K summary; The Motley Fool Q1 2026 transcript; Investing.com earnings call.)
The HanesBrands integration is the catalyst that governs everything. Management reiterated full-year 2026 guidance of $6.0 to $6.2 billion in revenue and adjusted EPS of $4.20 to $4.40. The key signals to watch are gross-margin trajectory as more of the acquired volume runs through Gildan's manufacturing, the pace of deleveraging toward the 1.5 to 2.5 times net-debt-to-EBITDA target, and the timing of resumed share buybacks, which remain paused until the midpoint is reached. Because the price assumes durable growth, the upside catalyst is evidence that synergies are landing, margin is expanding on the bigger base, and leverage is falling fast enough to restart capital returns. A stall in any of those would pressure a stock the cash-flow models already consider full. (Sources: StockTitan; Meyka Q1 2026 results; The Motley Fool transcript.)
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- COLM (COLUMBIA SPORTSWEAR COMPANY)
- FY2025 10-K: …("EMEA"), and Canada. The following tables disaggregate the Company's reportable segment Net sales by product category and channel, which the Company believes provides a meaningful depiction of how the nature, timing and uncertainty of Net sales are affected by economic factors: Year Ended December 31, 2025 (in…
- FY2025 10-K: …making decisions about the allocation of operating and capital resources to each segment. The CODM also uses this profit measure to assess the performance of each segment by comparing the results of each segment with one another, and in the overall strategic planning for each segment. Intersegment net sales and…
- KTB (KONTOOR BRANDS, INC.)
- FY2025 10-K: …retail industry, an increase in credit exposure to us or an increase in leverage by our customers over their suppliers. Further, the global economy periodically experiences recessionary conditions with reduced availability of credit, increased savings rates, declines in real estate and securities values and rising…
- FY2025 10-K: …a material adverse effect on our results of operations, cash flows and financial condition. Our larger customers generally have the scale to develop supply chains that enable them to change their buying patterns, or develop and market their own private label and other economy brands that compete with some of our…
- CRI (Carter's, Inc.)
- FY2025 10-K: …comfort and fit, quality, pricing, style, selection, convenience, and breadth of distribution. Both national brand and private label manufacturers, as well as specialty apparel brands and retailers, aggressively compete in the baby and young children's apparel market. Our primary competitors include (in alphabetical…
- FY2025 10-K: …of lower margins, such as through deflationary pressures on our selling prices and increases in production costs and costs to serve. The global apparel industry is subject to pricing pressure caused by many factors, including intense competition, the promotional retail environment, and changes in consumer demand. The…
- GIII (G III APPAREL GROUP LTD /DE/)
- FY2025 10-K: …nature of our industry may result in lower prices for our products and decreased gross profit margins. The apparel business is highly competitive. We have numerous competitors with respect to the sale of apparel, footwear and accessories, including digital websites, distributors that import products from abroad and…
- FY2025 10-K: …of the wholesale operations segment. The Company allocates overhead to its business segments on various bases, which include units shipped, space utilization, inventory levels, and relative sales levels, among other factors. The method of allocation has been applied consistently on a year-to-year basis. The total…
- UAA (UNDER ARMOUR, INC.)
- FY2025 10-K: …of operations. We operate in highly competitive markets and the size and resources of some of our competitors may allow them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenues and gross profit. The market for performance apparel, footwear and…
- FY2025 10-K: …the Company's principal business by geographic region based on the Company's strategy of being a global brand. These geographic regions include North America, EMEA, Asia-Pacific and Latin America. Each geographic segment operates exclusively in one industry: the development, marketing and distribution of branded…
- ZGN (ZGN)
- FY2025 20-F: …Operating Decision Maker ("CODM") as defined under IFRS 8 - Operating Segments ("IFRS 8"), for the purposes of allocating resources and assessing the performance of the Group. The Group is organized in three operating and reportable segments, based on a brand perspective, as described below: 1. Zegna segment -…
- FY2025 20-F: …have increased competitive pressures for luxury goods in several emerging markets. As these markets continue to grow, we anticipate that additional competitors, both international and domestic, will seek to enter these markets and that existing market participants will try to aggressively protect or increase their…
- AS (Amer Sports, Inc.)
- FY2025 20-F: …December 31, 2025, compared to the year ended December 31, 2024. Segment Adjusted Operating Profit in our Technical Apparel segment increased by 34.0% for the year ended December 31, 2025, compared to the year ended December 31, 2024. This increase was primarily driven by higher gross profit, partially offset by an…
- FY2025 20-F: …Operations Our management evaluates operating performance and makes investment and other decisions based on segment revenue and Segment Adjusted Operating Profit. Costs allocated to the segments include certain centralized functions provided and administered by the Amer Sports group, such as costs related to…
- LEVI (LEVI STRAUSS & CO)
- FY2025 10-K: …supply chain. Logistics . During fiscal year 2024 and as part of Project Fuel, the Company changed its distribution strategy from an owned and operated model to a mix of owned and third-party operated distribution centers used to warehouse and ship products to our wholesale customers, retail stores and e-commerce…
- FY2025 10-K: …or non-compliance can raise reputational challenges with our consumers and other stakeholders for various reasons, including the inability to sufficiently verify the origins for the material used in the products we sell. The global apparel industry is subject to intense competition and cost and pricing pressure. The…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.