Let’s be direct: Gildan Activewear (TSX:GIL) is among the most compelling long-term buys on the TSX proper now. The Canadian dividend inventory has pulled again roughly 21%, however the enterprise itself is executing at a excessive stage.
Earnings are rising quick, synergies are rising, and free money movement is increasing. Additional, administration simply raised its three-year targets, making the dip a pretty shopping for alternative for long-term traders.
Valued at a market cap of $14.8 billion, Gildan inventory affords shareholders a dividend yield of 1.7%. The TSX has returned 128% in dividend-adjusted beneficial properties to shareholders over the previous decade.
Right here’s why it may proceed to ship inflation-beating returns in 2026 and past.
Supply: Getty Photographs
A retail large
Montreal-based Gildan has been making T-shirts, fleece, and socks since 1946. Over the a long time, it has constructed one of the crucial cost-efficient, vertically built-in attire manufacturing operations on the planet, with amenities throughout Central America and Bangladesh.
On Dec. 1, 2025, Gildan closed its acquisition of HanesBrands. This was the defining second for the corporate’s subsequent chapter.
The deal doubled Gildan’s scale by combining iconic client manufacturers with its low-cost manufacturing engine.
- In accordance with the corporate’s This fall earnings name, full-year revenues from persevering with operations hit a document $3.6 billion, and that solely contains one month of HanesBrands’ contribution.
- Going into 2026, administration is guiding for income of $6 billion to $6.2 billion. That’s a step-change in dimension.
- Gildan raised its run-rate price synergy goal to $250 million over three years, up from the unique $200 million. The cadence is $100 million in 2026, $100 million in 2027, and a minimum of $50 million in 2028.
CEO Glenn Chamandy put it plainly on the decision: “We’re not stopping there. We’re going after extra.”
Is the TSX dividend inventory purchase?
Sure, This fall outcomes have been slightly blended versus avenue estimates. EBITDA (earnings earlier than curiosity, tax, depreciation, and amortization) got here in at $265.4 million in opposition to a $281.8 million estimate, and EBIT (earnings earlier than curiosity and tax) margins slipped quarter over quarter.
However zoom out, and the image appears to be like solely totally different.
- Adjusted diluted earnings per share for all of 2025 got here in at $3.51, up 17% yr over yr.
- For 2026, administration is guiding for $4.20 to $4.40, indicating progress of over 20%.
- Free money movement is anticipated to exceed $850 million in 2026 and surpass $1 billion in 2028.
- The corporate generated FCF of $493 million in 2025, so these estimates symbolize huge acceleration.
Furthermore, consensus EPS is anticipated to achieve $5.37 by the top of 2027 and $6.27 by 2028. That’s a 21.3% normalized EPS CAGR over three years. If the TSX inventory is priced at 25 occasions ahead earnings, it may double over the following two years.
Put merely: Gildan inventory is a progress story masquerading as a price inventory.
There are two issues dragging on near-term outcomes: a short lived stock drawdown throughout buyer channels, and the combination of two Hanes textile amenities which might be being shut down.
Administration is transferring manufacturing to Gildan’s lower-cost community. That creates a quick capability pinch, which administration is managing by proactively decreasing channel stock.
However by the second half of 2026 and into 2027, these headwinds flip into tailwinds. Bangladesh Section 2 building will start inside the subsequent 18 months. Manufacturing from the 2 closed Hanes factories will get absorbed, whereas synergies movement by way of and margins get better.
The adjusted working margin for 2026 is guided at roughly 20% with sequential enchancment anticipated by way of the yr.
The underside line
Gildan is a high quality Canadian producer with world scale, robust manufacturers, rising earnings, and a inventory buying and selling properly beneath its potential.
The 21% pullback has nothing to do with the enterprise breaking down. It has all the things to do with short-term integration noise and investor impatience.
Should you can maintain by way of the noise, Gildan appears to be like like a traditional buy-the-dip alternative on an organization that’s getting stronger.
