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Hanesbrands (HBI) Plunges Further: Should You Still Hold?

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Apparel retailer Hanesbrands Inc. (HBI - Free Report) is currently going through a rough patch. The company is plagued with currency headwinds, soft sales in the Activewear and direct-to-consumer segments, and a lackluster performance of the Champion brand. Notably, it has also lowered its fiscal 2016 guidance as it anticipates soft results in the upcoming fourth quarter. Consequently, the dismal performance has been reflected in the share price movement as well. In the past three months, the shares of this retailer have declined 16.2%, underperforming the Zacks categorized Consumer Discretionary industry which has showcased a gain of 5.51%. In fact, Hanesbrands hit a 52-week low of $21.49 on Dec 19, eventually closing at $22.09.

 

 

What’s Pulling the Stock Lower?

Notably, the Winston-Salem, NC-based apparel retailer has lowered the higher end of its fiscal top and bottom-line outlook to reflect the soft results in third-quarter 2016. For 2016, Hanesbrands anticipates adjusted earnings in the range of $1.89–$1.92 per share compared to $1.89–$1.95 expected previously. The company anticipates sales between $6.15 billion and $6.18 billion compared to $6.15 billion and $6.25 billion projected earlier. Further, it estimates operating profit in the range of $940 million to $955 million compared to the range of $940 million to $975 million anticipated previously.

HANESBRANDS INC Price, Consensus and EPS Surprise

 

HANESBRANDS INC Price, Consensus and EPS Surprise | HANESBRANDS INC Quote

Cold weather in metropolitan areas and snow sports regions are prerequisites for a good start to the outerwear season prior to Black Friday. However, an unseasonably warm October and late arrival of winter has prevented the company from gaining the benefit of early orders. Consequently, soft sales are anticipated to hinder the fourth-quarter results as well.

However, this Zacks Rank #3 (Hold) stock has an expected earnings growth rate of 17.3% in the next three to five years. Moreover, the company’s Innovate to Elevate strategy which involves consistent product innovation and focus on high margin products is likely to aid the company register a turnaround in the future.

Stocks to Consider

Better-ranked stocks in the broader consumer discretionary sector are Perry Ellis International Inc. , Tailored brands Inc. and Francesca’s Holdings Corporation .

Tailored Brands and Francesca’s both sport a Zacks Rank #1 (Strong Buy) and has an expected earnings growth of 17.5% and 13.8%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

Perry Ellis carries a Zacks Rank #2 (Buy). It has an average earnings surprise of 19.5% in the trailing four quarters.

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