Gildan Activewear Inc. GIL has been on a steady upward trajectory, recently approaching its 52-week high of $55.39 reached last Friday. This surge reflects the company’s outstanding performance, fueled by market share expansion, strong sales growth and enhanced operational efficiency.

The stock’s momentum received an additional boost from Gildan’s fourth-quarter 2024 earnings report released on Feb. 19, which surpassed market expectations. The results highlighted robust revenue growth, margin expansion and disciplined execution of the company’s Sustainable Growth Strategy (GSG), reinforcing investor confidence and driving the stock higher.

GIL has seen a remarkable 23.8% rise in the past six months, outpacing the industry's growth of 18.1%. The company’s commitment to its GSG strategy has been instrumental in accelerating growth, strengthening consumer engagement and increasing market penetration. This strategic execution has also helped Gildan outpace the S&P 500 and the broader sector, which climbed 16.2% each in the same timeframe.

GIL Stock's Six-Month Peformance

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Technical indicators are also supportive of Gildan’s strong performance. The stock is trading above its 50-day and 200-day moving averages, indicating robust upward momentum and price stability. This moving average is an important indicator for gauging market trends and momentum.

GIL Trades Above 200 & 50-Day SMAs

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Evaluating Gildan’s Stock Momentum

Gildan’s stock rally after its earnings release highlights investor optimism. GIL exceeded the Zacks Consensus Estimate for earnings per share (EPS) and revenues in fourth-quarter 2024. Adjusted EPS rose 10.7% year over year, whereas revenues grew 5%. The upward trajectory is also driven by the company’s international sales surging 20% for the second consecutive quarter, fueled by strong demand in Europe and distributor inventory replenishment.
GIL’s Activewear segment grew 11%, benefiting from increased sales volumes and the successful launch of innovative products featuring soft cotton technology. Despite a 23% decline in hosiery and underwear sales due to the Under Armour phaseout, underlying category growth remained solid, with high single-digit gains from national account customers.

The company also witnessed a gross margin improvement, rising to 30.8%, reflecting a 60-basis-point (bps) increase. This was driven by lower raw material costs, while adjusted SG&A expenses declined, aided by cost efficiencies and a jobs credit from Barbados. Gildan's ability to capture market share in key growth categories, optimize its global manufacturing footprint, and enhance its competitive positioning amid industry shifts has fueled investor confidence, pushing the stock to a new high.

GIL’s 2025 Outlook Looks Promising

Gildan enters 2025 with strong momentum, driven by its GSG strategy, which has reinforced its competitive positioning. The company's new Bangladesh manufacturing complex is fully operational, enhancing cost efficiency and global flexibility. Additionally, Gildan's innovation pipeline is poised to drive further growth, with exciting product launches ahead. On the ESG front, Gildan continues to earn recognition, securing a spot on the Dow Jones North America Index for the 12th consecutive year and the 2025 Sustainability Yearbook for the 13th year.

For 2025, net sales growth is expected to increase year over year in the mid-single digits. The adjusted operating margin is projected to improve 50 bps. Capital expenditure is anticipated to be 5% of sales. Adjusted earnings are expected to be between $3.38 and $3.58 per share, indicating a year-over-year increase of 13-19%. The free cash flow is projected to exceed $450 million.

For the first quarter of 2025, net sales are expected to increase year over year in the low-single digits. Excluding the impacts of the Under Armour sock license agreement, first-quarter net sales are projected to grow in the mid-single digits. The adjusted operating margin is expected to align with the full-year guidance of a 50-bps increase.

Estimates for GIL Stock: What’s on the Horizon?

Reflecting the positive sentiment around Gildan, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 60 days, analysts have increased their estimates for the current and next fiscal years by 2.9% to $3.48 and by 1.5% to $3.96 per share, respectively. These estimates indicate expected year-over-year growth rates of around 4.4% and 5.8%, respectively.

Final Thought on GIL Stock

Investors may find Gildan stock appealing due to its solid fourth-quarter performance, driven by strategic growth initiatives and operational efficiencies. With a history of robust sales growth, margin expansion and a commitment to sustainable growth, Gildan stands out as a promising investment opportunity. The Zacks Rank #2 (Buy) stock has been demonstrating strong market momentum, suggesting upside potential.

Other Stocks to Consider

We have highlighted three other top-ranked stocks, namely, Under Armour UAA, Ralph Lauren Corporation RL and lululemon athletica LULU.

Under Armour is one of the leading designers, marketers, and distributors of authentic athletic footwear, apparel and accessories for a wide variety of sports and fitness activities in the United States and internationally. It has a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for UAA’s fiscal 2024 sales and earnings indicates declines of 9.9% and 44.4%, respectively, from the year-ago reported figures. Under Armour delivered an earnings surprise of 98.6% in the trailing four quarters, on average.

Ralph Lauren designs, markets and distributes lifestyle products in North America, Europe, Asia and internationally. It currently carries a Zacks Rank #2.

RL has a trailing four-quarter earnings surprise of 6.5%, on average. The consensus estimate for Ralph Lauren’s current financial year sales and earnings indicates advancements of 5.8% and 16.5%, respectively, from the prior-year figures.

lululemon is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for lululemon’s current financial-year sales and EPS indicates growth of 9.7% and 12.5%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 6.7%, on average.

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Ralph Lauren Corporation (RL) : Free Stock Analysis Report

lululemon athletica inc. (LULU) : Free Stock Analysis Report

Gildan Activewear, Inc. (GIL) : Free Stock Analysis Report

Under Armour, Inc. (UAA) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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