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Hanesbrands (HBI): What's in Store this Earnings Season?
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Hanesbrands Inc. (HBI - Free Report) is set to report third-quarter 2016 results on Oct 27, after market close. Last quarter, the company posted a negative earnings surprise of 1.92%. In the trailing four quarters, the company delivered negative surprises in two quarters and positive in the other two, with an average beat of 5.76%.
Let's see how things are shaping up for this announcement.
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 third-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 increasing its focus on core products and continues to balance the same with the right proportion of promotion, media and innovation. During the second quarter, the company began rebalancing marketing features to drive core product sales, which is expected to boost the top line in the to-be-reported quarter.
Hanesbrands' latest innovation- the Fresh IQ odor technology used in both Innerwear as well as Outerwear segments was received well by customers. The products are also expected to contribute to results in the third quarter.
However, a challenging operating environment, macroeconomic uncertainty and unfavorable inventory levels may pose problems for the company.
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.
Earnings Whispers
Our proven model does not conclusively show that Hanesbrands is likely to beat 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 estimates. However, that is not the case here as you will see below:
Zacks ESP: The company’s Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 56 cents.
Zacks Rank: Hanesbrands holds a Zacks Rank #4 (Sell). Please note that 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:
PVH Corporation (PVH - Free Report) , with an earnings ESP of +1.25% and a Zacks Rank #3.
Carnival Corporation. (CCL - Free Report) , with an earnings ESP of +1.72% and a Zacks Rank #3.
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Hanesbrands (HBI): What's in Store this Earnings Season?
Hanesbrands Inc. (HBI - Free Report) is set to report third-quarter 2016 results on Oct 27, after market close. Last quarter, the company posted a negative earnings surprise of 1.92%. In the trailing four quarters, the company delivered negative surprises in two quarters and positive in the other two, with an average beat of 5.76%.
Let's see how things are shaping up for this announcement.
HANESBRANDS INC Price and EPS Surprise
HANESBRANDS INC Price and EPS Surprise | HANESBRANDS INC Quote
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 third-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 increasing its focus on core products and continues to balance the same with the right proportion of promotion, media and innovation. During the second quarter, the company began rebalancing marketing features to drive core product sales, which is expected to boost the top line in the to-be-reported quarter.
Hanesbrands' latest innovation- the Fresh IQ odor technology used in both Innerwear as well as Outerwear segments was received well by customers. The products are also expected to contribute to results in the third quarter.
However, a challenging operating environment, macroeconomic uncertainty and unfavorable inventory levels may pose problems for the company.
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.
Earnings Whispers
Our proven model does not conclusively show that Hanesbrands is likely to beat 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 estimates. However, that is not the case here as you will see below:
Zacks ESP: The company’s Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 56 cents.
Zacks Rank: Hanesbrands holds a Zacks Rank #4 (Sell). Please note that 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:
PVH Corporation (PVH - Free Report) , with an earnings ESP of +1.25% and a Zacks Rank #3.
Time Warner Inc. , with an earnings ESP of +1.49% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carnival Corporation. (CCL - Free Report) , with an earnings ESP of +1.72% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>