Gildan Activewear Inc. was founded in 1984 and is headquartered in Quebec, Canada. It is a vertically integrated manufacturer specializing in everyday basic apparel, including activewear, underwear and hosiery products. The company's primary product categories include activewear tops and bottoms, socks and underwear. Gildan's activewear lines feature T-shirts, fleece tops and bottoms, sports shirts, polos, and tank tops. Its hosiery offerings include athletic, dress, casual, workwear, liner, and therapeutic socks.

The underwear range includes men's and boys' tops and bottoms, as well as ladies' panties. Gildan markets its products across North America, Europe, Asia Pacific and Latin America under a diverse portfolio of company-owned brands such as Gildan, American Apparel, Comfort Colors, Gildan Hammer, GoldToe, and Peds. The company's manufacturing operations are located in the US, Central America, the Caribbean and Bangladesh, and it has  approximately 50,000 employees.

Segmental growth drives Q2 25

Gildan Activewear released its Q2 25 earnings on July 31, 2025, posting revenue of $919m, up 6.6% y/y, mainly driven by strong growth in its Activewear division, where sales rose 12% due to higher volumes, market share gains, and the success of new products such as Soft Cotton Technology. Operating profit rose by 51.5% y/y to $209m, driven by higher sales volumes and, to a lesser extent, a favourable product mix and higher net prices, with margins expanding from 16.0% to 22.7%.

Moreover, net income increased by 136.3% y/y to $138m, supported by an improved operating performance. The company has now exceeded analysts' quarterly estimates for seven consecutive quarters.

Strategic merger agreement

On August 13, 2025, Gildan Activewear and HanesBrands announced a definitive merger agreement, positioning the combined entity as a global basic apparel leader. The transaction values HanesBrands at $2.2bn in equity, with an enterprise value of $4.4bn, effectively doubling Gildan's revenue and granting access to iconic innerwear brands like Hanes.

Gildan's proven low-cost vertically integrated manufacturing platform is expected to unlock at least $200m in annual run-rate cost synergies within three years ($50m in 2026, $100m in 2027, $50m in 2028). The deal is immediately accretive to Gildan's adjusted diluted EPS and 20%+ accretive pro-forma for synergies, with adjusted diluted EPS CAGR projected in the low 20% range over the next three years. Following this announcement Gildan’s stock rose 11.8%.

Robust analyst estimates

Gildan Activewear has posted a decent revenue CAGR of 3.8% over FY 21-24, reaching $3.3bn, driven mainly thanks to volume growth in Activewear and international market expansion. EBIT outpaced revenue at a CAGR of 10.3%, reaching $696m, with margins expanding from 17.8% to 21.3%, aided by margin improvement from lower input costs and operational efficiencies. However, net income decreased at a CAGR of minus 12.9% to $401m.

In comparison, Levi Strauss & Co., a local peer, reported a slightly lower revenue CAGR of 3.3% to $6.4bn in FY 24. However, operating income declined at a CAGR of minus 1.6% to $654m. Net income decreased at a CAGR of minus 27.5% to $211m in FY 24.

Looking ahead, analysts anticipate revenue CAGR of 31.4% over FY 24-27, reaching $7.4bn in FY 27. Analysts expect EBIT CAGR of 28.3% to $1.5bn, with margins contracting by 150bp to 19.8%. Net income is estimated to increase at a CAGR of 33.7% to $959m, with EPS reaching $5.2 in FY 27 from $2.5 in FY 24. Meanwhile, analysts estimate an EBIT CAGR of 9.4% and a net profit CAGR of 48.8% for Levi Strauss & Co.

Solid stock performance

Over the past year, the company's stock delivered robust returns of approximately 30.0%. In comparison, Levi Strauss & Co.’s stock delivered lower returns of about 12.3% over the same period.

Gildan Activewear is currently trading at a P/E of 17.8x, based on the FY 25 estimated EPS of $3.4, which is higher than its 3-year historical average of 13.1x and Levi Strauss & Co.‘s P/E of 16.2x. In terms of EV/EBIT, the company is currently trading at 14.1x, based on the FY 25 estimated EBIT of $748.6m, which is higher than its 3-year historical average of 11.1x and that of Levi Strauss & Co. (13.5x).

Gildan Activewear is monitored and universally liked by 13 analysts, with each having ‘Buy’ ratings, with an average target price of $67, implying 10.5% upside potential from the current price.

Overall, the company's strong segmental growth, strategic merger with HanesBrands, and improved free cash flow position it well for future success. The company's robust stock performance and favorable analyst ratings underscore its potential as a compelling investment opportunity. Despite higher valuations, Gildan's strategic initiatives and operational efficiencies suggest continued growth and profitability, making it an attractive option for investors seeking long-term value in the apparel industry.

However, Gildan Activewear faces significant risks, including international sales weakness, declining hosiery and underwear segments, increased financial expenses and management instability. In addition, exposure to credit, liquidity, and market risks from financial instruments, alongside heightened interest rate risk from recent debt financing activities, further compound the company's challenges.