Back to top

Analyst Blog

Zacks Equity Research

Hanesbrands Upgraded to Outperform

HBI WMT TGT

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We are upgrading our recommendation on Hanesbrands Inc. (HBI - Analyst Report) to Outperform from Neutral on the back of solid third quarter 2012 results.

Hanesbrands' third quarter earnings of $1.11 per share outpaced the prior-year earnings by 31% and the Zacks Consensus Estimate by 5.7%. The upswing was driven by strong sales growth in both Innerwear and Outerwear segments. Operating profit in the quarter climbed 8% to $156.5 million, driven by lower selling, general and administrative expenses. Operating profit margin expanded 60 basis points to 12.8%.

The company introduced new products like Hanes ComfortBlend men’s underwear, Hanes Classics slim fit and stretch premium underwear T-shirts, and Bali and Barely There Smart Size seamless bras. In addition, the quarter saw strong sales of Champion activewear and Gear for Sports apparels.  

Overall, the company commands a portfolio of well-recognized flagship brands, including Hanes, Champion, Playtex and Bali, which reinforces its well-established position in the industry. The company has also undertaken customer-specific programs like the C9 and Just My Size programs at stores of retailers like Target Corporation (TGT - Analyst Report) and Wal-Mart Stores, Inc. (WMT - Analyst Report), thus boosting sales of brands like Champion and Just My Size. The Champions brand has reported double-digit growth consecutively for the last few quarters.

Moreover, the company has undertaken a program that uses the ‘Kanban’ concept for its inventory management. The multi-initiative ‘Kanban’ effort determines production quantities, and in doing so, it facilitates just-in-time production and ordering systems. Eventually, it ensures that the supply of products meets customer demands while effectively managing inventory levels.

Despite currency and cotton cost headwinds, Hanesbrands anticipates its earnings and sales to improve in fiscal 2012. Hanesbrands now expects earnings in the range of $2.54 – $2.60 per share for fiscal 2012, versus $2.50 – $2.60 anticipated previously. The company also expects its sales to increase by approximately 2% for 2012.

The company expects free cash flow to be toward the higher end of the previous range of $400 million to $500 million. In addition, the company continues to see substantial savings in selling, general & administrative costs from efficiency initiatives and is also undertaking efforts to optimize its inventories, reduce long-term debt and de-leverage its balance sheet.

Currently, Hanesbrands carries a Zacks #3 Rank (short-term Hold rating).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ANI PHARMACE ANIP 25.07 +15.96%
BITAUTO HOLD BITA 35.21 +14.42%
E HOUSECHINA EJ 10.97 +9.05%
CANADIAN SOL CSIQ 26.96 +7.10%
KNIGHTSBRIDG VLCCF 12.50 +5.75%