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Bear of the Day: Gildan (GIL)

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Stocks which have the strongest earnings trends tend to outperform the broad market over time. It makes sense, as investors should be drawn to the most profitable companies. When the broad market is rallying up near all-time highs, it is easy to feel like every stock is a profitable company. It is not until the going gets rough, and the market reels in a bit, that the cream rises to the top and weak hands fold up.

One way to make sure your stocks have strong earnings trends is to look up their Zacks Rank. Stocks which are Zacks Rank #1 (Strong Buy) have the best earnings trends while those which are Zacks Rank #5 (Strong Sell) have the weakest trends.

Today’s Bear of the Day is a stock with a weaker earnings trend. It’s Zacks Rank #5 (Strong Sell) Gildan (GIL - Free Report) . Gildan Activewear Inc. manufactures and sells a range of apparel products in North America, Europe, the Asia-Pacific, and Latin America. The company manufactures and markets active wear products, including T-shirts, fleece tops and bottoms, and sport shirts under Gildan, Gildan Performance, Gildan Platinum, Gildan Hammer, Comfort Colors, American Apparel, Anvil by Gildan, Alstyle, Prim + Preux, and Gold Toe brands.

The reason for the negative Zacks Rank comes from earnings estimates. Analysts on Wall Street have been cutting their earnings estimates for the company. The biggest hit is to the current year Zacks Consensus Estimates. Over the last 60 days, five analysts have cut their estimates. That negativity has dropped the Zacks Consensus Estimate from 23 cents to a contraction of 75 cents. That’s down from EPS of $1.66 in the previous year.

One feather in the cap of the bulls here is that earnings growth s supposed to return next year. Next year’s Zacks Consensus Estimate is slated to come in at $1.31. That would represent growth of 273% for next year. That’s on revenue growth of 36.2% next year.

The Textile – Apparel industry ranks in the Top 50% of our Zacks Industry Rank. Investors looking for stocks within the same industry that are in the good graces of the Zacks Rank have a couple of other names to check out. Both Crox (CROX - Free Report) and Hanesbrands (HBI - Free Report) are currently Zacks Rank #1 (Strong Buy) stocks.

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Hanesbrands Inc. (HBI) - free report >>

Crocs, Inc. (CROX) - free report >>

Gildan Activewear, Inc. (GIL) - free report >>

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