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Hanesbrands (HBI) to Report Q2 Earnings: What to Expect?
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Hanesbrands Inc.(HBI - Free Report) is set to report second-quarter 2016 results on Aug 2, after the market closes. Last quarter, the company posted a positive earnings surprise of 18.18%. In the trailing four quarters, the company delivered in-line results in one quarter, missed estimates in another and surpassed expectations in the other two, with an average beat of 6.24%.
Let's see how things are shaping up for this announcement.
Factors to Consider
We note that Hanesbrands has been posting decent results over the past few quarters on the back of strategic acquisitions and the success of the Innovate-to-Elevate strategy. The high-margin products that the strategy focuses on should favor second-quarter margins as well.
The company is also consistent with its innovations that help it to maintain market share as well as a loyal customer base. Further, the company is focusing more on its core products and continues to balance the same with the right proportion of promotion, media and innovation. During the first quarter, the company began rebalancing marketing features to drive core product sales, which is expected to boost top line in the to-be-reported quarter.
Hanesbrands recently raised its earnings and sales guidance for 2016 based on expectations of increased synergies from the Champion Europe and Pacific Brands acquisitions and debt refinancing. This reflects the company’s confidence about robust earnings in the quarter as well.
However, challenging operating environment, macroeconomic uncertainty and unfavorable inventory level may pose problems for the company in the to-be-reported quarter.
Further, unfavorably currency fluctuations have been hurting revenues over the past few quarters and the trend is likely to persist in the second quarter as well. Moreover, inconsistent traffic at its stores, in particular in the mass and mid-tier channels, and soft consumer spending trends are expected to weigh on revenues for the quarter to be reported.
Earnings Whispers
Our proven model does not conclusively show that Hanesbrands is likely to beat on earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to surpass earnings estimate. However, that is not the case here as you will see below:
Zacks ESP: The company’s Earnings ESP is -3.77%. This is because the Most Accurate estimate stands at 51 cents, while the Zacks Consensus Estimate stands at 53 cents.
Zacks Rank: Hanesbrands holds a Zacks Rank #2 (Buy). Although a favorable Zacks Rank increases the predictive power of ESP, the company’s negative Earnings ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the broader consumer discretionary space that have the right combination of elements to post an earnings beat this quarter:
Brunswick Corporation. (BC - Free Report) with an Earnings ESP of +0.86% and a Zacks Rank #3.
Pool Corporation (POOL - Free Report) with an Earnings ESP of +1.00% and a Zacks Rank #2.
CBS Corporation. with an Earnings ESP of +1.16% and a Zacks Rank #2.
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Hanesbrands (HBI) to Report Q2 Earnings: What to Expect?
Hanesbrands Inc.(HBI - Free Report) is set to report second-quarter 2016 results on Aug 2, after the market closes. Last quarter, the company posted a positive earnings surprise of 18.18%. In the trailing four quarters, the company delivered in-line results in one quarter, missed estimates in another and surpassed expectations in the other two, with an average beat of 6.24%.
Let's see how things are shaping up for this announcement.
Factors to Consider
We note that Hanesbrands has been posting decent results over the past few quarters on the back of strategic acquisitions and the success of the Innovate-to-Elevate strategy. The high-margin products that the strategy focuses on should favor second-quarter margins as well.
The company is also consistent with its innovations that help it to maintain market share as well as a loyal customer base. Further, the company is focusing more on its core products and continues to balance the same with the right proportion of promotion, media and innovation. During the first quarter, the company began rebalancing marketing features to drive core product sales, which is expected to boost top line in the to-be-reported quarter.
HANESBRANDS INC Price and EPS Surprise
HANESBRANDS INC Price and EPS Surprise | HANESBRANDS INC Quote
Hanesbrands recently raised its earnings and sales guidance for 2016 based on expectations of increased synergies from the Champion Europe and Pacific Brands acquisitions and debt refinancing. This reflects the company’s confidence about robust earnings in the quarter as well.
However, challenging operating environment, macroeconomic uncertainty and unfavorable inventory level may pose problems for the company in the to-be-reported quarter.
Further, unfavorably currency fluctuations have been hurting revenues over the past few quarters and the trend is likely to persist in the second quarter as well. Moreover, inconsistent traffic at its stores, in particular in the mass and mid-tier channels, and soft consumer spending trends are expected to weigh on revenues for the quarter to be reported.
Earnings Whispers
Our proven model does not conclusively show that Hanesbrands is likely to beat on earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to surpass earnings estimate. However, that is not the case here as you will see below:
Zacks ESP: The company’s Earnings ESP is -3.77%. This is because the Most Accurate estimate stands at 51 cents, while the Zacks Consensus Estimate stands at 53 cents.
Zacks Rank: Hanesbrands holds a Zacks Rank #2 (Buy). Although a favorable Zacks Rank increases the predictive power of ESP, the company’s negative Earnings ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies in the broader consumer discretionary space that have the right combination of elements to post an earnings beat this quarter:
Brunswick Corporation. (BC - Free Report) with an Earnings ESP of +0.86% and a Zacks Rank #3.
Pool Corporation (POOL - Free Report) with an Earnings ESP of +1.00% and a Zacks Rank #2.
CBS Corporation. with an Earnings ESP of +1.16% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>