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Gildan Activewear and Chewy have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – December 14, 2021 – Zacks Equity Research shares Gildan Activewear Inc. (GIL - Free Report) as the Bull of the Day, and Chewy, Inc. (CHWY - Free Report) as the Bear of the Day.
Gildan Activewear Inc. is an apparel company focused on the basics, from t-shirts to socks. Gildan built its brand by operating behind the scenes through wholesalers, screen printers, and beyond. The company is in the midst of a big comeback year and its long-term outlook is strong.
Name on the Tag
Gildan is not a flashy household brand name in retail and many people might not even notice when they buy GIL apparel. The company is essentially a wholesaler of everyday basic apparel that is most often branded by some other entity. If one were to look in their closet at any vacation destination T-shirt, school sweatshirt, or company polo, there is a good chance many of them are made by Gildan.
Gildan operates in North America, Europe, AsiaPacific, and Latin America, through a diverse portfolio of company-owned brands, including its namesake, American Apparel, Comfort Colors, GoldToe, Secret Silky, and many others. Its products include sweatshirts/fleece, T-shirts & tanks, socks, activewear, underwear, and most other very basic wardrobe staples.
The company operates in the background and therefore is not as susceptible to the traditionally quickly changing fashion world that sees brands go from cool to out-of-style sometimes overnight. Gildan customers include screen printers or embellishers, wholesale distributors, traditional and e-commerce retailers, and “global lifestyle brand companies.”
Recent Performance and Growth Outlook
Gildan has steadily grown its revenue for decades, with some of its only slip ups coming amid massive global economic hardships. The pandemic hit the firm practically hard, with revenue down 30% last year. But the clothing maker has already bounced back in a big way and it topped our Q3 earnings and revenue estimates in early November.
Gildan is also expanding its operations amid international supply chain disruptions. This includes Monday’s announcement that it bought Frontier Yarns, which it already works with, to help boost its capacity. The company noted that “approximately” 40% of Frontier's production in 2021 was dedicated to yarn sold to Gildan for textile manufacturing in Central America and the Caribbean.
Gildan’s new acquisition helps it continue to internalize its yarn production as part of its “global vertically integrated supply chain.” Looking ahead, Gildan executives believe the firm can gain market share amid rising inflation in the U.S. and elsewhere. “Our current pricing levels remain only modestly above 2019 pre-pandemic levels, providing us with strong flexibility to manage inflationary pressure as we go forward,” Gildan’s Rhodri Harries said on its early November earnings call.
Gildan reported record quarterly results in Q3. Since then, its FY21 and FY22 consensus EPS estimates have climbed 12% and 11%, respectively. Plus, GIL has topped our earnings estimates by an average of 85% in the trailing four quarters, including a 40% beat in Q3.
Looking ahead, Zacks estimates call for Gildan to swing from an adjusted loss of -$0.18 a share last year all the way to +$2.38 a share, with FY22 set to jump another 10% to $2.60 per share. Meanwhile, its revenue is projected to soar 44% to $2.85 billion to help it come in just above its 2019 total. Gildan is then projected to follow that up with another 8% growth in 2022, which would see it return to previous pre-pandemic expansion rates.
Other Fundamentals
Gildan reinstated its stock buyback program in August and its strong free cash flow helped it reduce its debt last quarter. The company also pays a dividend, and its Textile – Apparel industry lands in the top 10% of over 250 Zacks industries at the moment. Plus, seven of the nine brokerage recommendations Zacks has for GIL are “Strong Buys” or “Buys.”
GIL shares have easily outperformed its highly ranked industry over the last year, up 48% vs. 17%. The stock broke new records in early November after it climbed above where it was in the summer of 2019. Gildan has slipped since then and is currently trading roughly 10% beneath its Zacks consensus price target, which could provide a more enticing entry point.
The recent fall has taken it from overbought RSI levels of well above 70 to under neutral at 46. Gildan’s pullback helped make its valuation levels even more attractive. The stock is currently trading at a discount to its highly-ranked industry and right near its own year-long lows at 15.8X forward 12-month earnings. This also marks a 30% discount to its own highs and has pushed it underneath where it was throughout much of 2019.
Bottom Line
Gildan’s bottom-line positivity helps the stock land a Zacks Rank #1 (Strong Buy) at the moment, alongside its “B” grade for Growth in our Style Scores system. Despite the recent pullback, GIL shares still trade above their 50-day moving average. The stock appears worth considering as a long-term play within retail because of its ability to keep growing by sticking to the basics and helping fuel global clothing expansion in a more under-the-radar fashion.
Chewy, Inc. is an e-commerce pet store that went public in 2019 and its stock price soared off the initial coronavirus lows until February 2021. Since then, Chewy shares have mostly tumbled amid slowing growth and a wide-ranging recalibration of pandemic high-flyers.
E-Commerce Pet Store Basics
Chewy, like all pet stores, sells pet food, supplies, treats, medications, and more for a variety of animals. The company has capitalized on the broader e-commerce expansion over the past decade. Chewy’s strength is largely based on its ability to add loyal pet owners to its Autoship business that allows people to have food and more delivered at regular intervals.
Chewy posted a banner year in 2020 and it’s expanded its offering to include telehealth, a beefed-up pet pharmacy platform, and more. But Wall Street has dumped the stock in a post-lockdown world amid rising costs and slowing growth.
Recent Performance and Outlook
Chewy ended Q3 with 20.4 million active customers, up 15% YoY. The company also reported a smaller-than-projected Q3 loss on December 9 (-$0.03 vs. -$0.05 per share) and its revenue popped 24%. But it still faces challenges in the form of “ongoing supply chain disruptions, labor shortages, and higher inflation.”
Chew’s revenue climbed 37% in 2019 and 47% in covid-boosted FY20. Looking ahead, current Zacks estimates call for its FY21 revenue to jump another 25% to $8.9 billion, with FY22 projected to pop 20% higher. Along with slowing top-line growth, its adjusted FY21 earnings are projected to slip 22%.
Bottom Line
Chewy’s earnings estimates have trended heavily in the wrong direction since its recent release, with its Most Accurate Zacks estimates (the most recent) coming in way below its recently-lowered consensus estimates. These downward revisions help CHWY land a Zacks Rank #5 (Strong Sell) right now. And its Consumer Products – Staples industry is in the bottom 5% of over 250 Zacks industries right now.
Chewy stock did jump at the end of last week, following a post-release selloff. The positivity continued Monday, but CHWY is still trading below where it was before its Q3 release and remains over 50% under its mid-February records.
Chewy’s recent pop could be linked to some technical-focused trading, after it fell into oversold RSI territory (30 or under) last Thursday. The stock could continue to gain some momentum, but it’s still miles under its 50-day and 200-day moving averages.
Chewy might be more of a day trader-style stock until it can sustain a bit more of a comeback. And it’s worth pointing out that Wall Street is currently betting rather heavily against the stock—short interest at roughly 20% of the float.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Gildan Activewear and Chewy have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – December 14, 2021 – Zacks Equity Research shares Gildan Activewear Inc. (GIL - Free Report) as the Bull of the Day, and Chewy, Inc. (CHWY - Free Report) as the Bear of the Day.
Here is a synopsis of all five stocks:
Bull of the Day:
Gildan Activewear Inc. is an apparel company focused on the basics, from t-shirts to socks. Gildan built its brand by operating behind the scenes through wholesalers, screen printers, and beyond. The company is in the midst of a big comeback year and its long-term outlook is strong.
Name on the Tag
Gildan is not a flashy household brand name in retail and many people might not even notice when they buy GIL apparel. The company is essentially a wholesaler of everyday basic apparel that is most often branded by some other entity. If one were to look in their closet at any vacation destination T-shirt, school sweatshirt, or company polo, there is a good chance many of them are made by Gildan.
Gildan operates in North America, Europe, AsiaPacific, and Latin America, through a diverse portfolio of company-owned brands, including its namesake, American Apparel, Comfort Colors, GoldToe, Secret Silky, and many others. Its products include sweatshirts/fleece, T-shirts & tanks, socks, activewear, underwear, and most other very basic wardrobe staples.
The company operates in the background and therefore is not as susceptible to the traditionally quickly changing fashion world that sees brands go from cool to out-of-style sometimes overnight. Gildan customers include screen printers or embellishers, wholesale distributors, traditional and e-commerce retailers, and “global lifestyle brand companies.”
Recent Performance and Growth Outlook
Gildan has steadily grown its revenue for decades, with some of its only slip ups coming amid massive global economic hardships. The pandemic hit the firm practically hard, with revenue down 30% last year. But the clothing maker has already bounced back in a big way and it topped our Q3 earnings and revenue estimates in early November.
Gildan is also expanding its operations amid international supply chain disruptions. This includes Monday’s announcement that it bought Frontier Yarns, which it already works with, to help boost its capacity. The company noted that “approximately” 40% of Frontier's production in 2021 was dedicated to yarn sold to Gildan for textile manufacturing in Central America and the Caribbean.
Gildan’s new acquisition helps it continue to internalize its yarn production as part of its “global vertically integrated supply chain.” Looking ahead, Gildan executives believe the firm can gain market share amid rising inflation in the U.S. and elsewhere. “Our current pricing levels remain only modestly above 2019 pre-pandemic levels, providing us with strong flexibility to manage inflationary pressure as we go forward,” Gildan’s Rhodri Harries said on its early November earnings call.
Gildan reported record quarterly results in Q3. Since then, its FY21 and FY22 consensus EPS estimates have climbed 12% and 11%, respectively. Plus, GIL has topped our earnings estimates by an average of 85% in the trailing four quarters, including a 40% beat in Q3.
Looking ahead, Zacks estimates call for Gildan to swing from an adjusted loss of -$0.18 a share last year all the way to +$2.38 a share, with FY22 set to jump another 10% to $2.60 per share. Meanwhile, its revenue is projected to soar 44% to $2.85 billion to help it come in just above its 2019 total. Gildan is then projected to follow that up with another 8% growth in 2022, which would see it return to previous pre-pandemic expansion rates.
Other Fundamentals
Gildan reinstated its stock buyback program in August and its strong free cash flow helped it reduce its debt last quarter. The company also pays a dividend, and its Textile – Apparel industry lands in the top 10% of over 250 Zacks industries at the moment. Plus, seven of the nine brokerage recommendations Zacks has for GIL are “Strong Buys” or “Buys.”
GIL shares have easily outperformed its highly ranked industry over the last year, up 48% vs. 17%. The stock broke new records in early November after it climbed above where it was in the summer of 2019. Gildan has slipped since then and is currently trading roughly 10% beneath its Zacks consensus price target, which could provide a more enticing entry point.
The recent fall has taken it from overbought RSI levels of well above 70 to under neutral at 46. Gildan’s pullback helped make its valuation levels even more attractive. The stock is currently trading at a discount to its highly-ranked industry and right near its own year-long lows at 15.8X forward 12-month earnings. This also marks a 30% discount to its own highs and has pushed it underneath where it was throughout much of 2019.
Bottom Line
Gildan’s bottom-line positivity helps the stock land a Zacks Rank #1 (Strong Buy) at the moment, alongside its “B” grade for Growth in our Style Scores system. Despite the recent pullback, GIL shares still trade above their 50-day moving average. The stock appears worth considering as a long-term play within retail because of its ability to keep growing by sticking to the basics and helping fuel global clothing expansion in a more under-the-radar fashion.
Bear of the Day:
Chewy, Inc. is an e-commerce pet store that went public in 2019 and its stock price soared off the initial coronavirus lows until February 2021. Since then, Chewy shares have mostly tumbled amid slowing growth and a wide-ranging recalibration of pandemic high-flyers.
E-Commerce Pet Store Basics
Chewy, like all pet stores, sells pet food, supplies, treats, medications, and more for a variety of animals. The company has capitalized on the broader e-commerce expansion over the past decade. Chewy’s strength is largely based on its ability to add loyal pet owners to its Autoship business that allows people to have food and more delivered at regular intervals.
Chewy posted a banner year in 2020 and it’s expanded its offering to include telehealth, a beefed-up pet pharmacy platform, and more. But Wall Street has dumped the stock in a post-lockdown world amid rising costs and slowing growth.
Recent Performance and Outlook
Chewy ended Q3 with 20.4 million active customers, up 15% YoY. The company also reported a smaller-than-projected Q3 loss on December 9 (-$0.03 vs. -$0.05 per share) and its revenue popped 24%. But it still faces challenges in the form of “ongoing supply chain disruptions, labor shortages, and higher inflation.”
Chew’s revenue climbed 37% in 2019 and 47% in covid-boosted FY20. Looking ahead, current Zacks estimates call for its FY21 revenue to jump another 25% to $8.9 billion, with FY22 projected to pop 20% higher. Along with slowing top-line growth, its adjusted FY21 earnings are projected to slip 22%.
Bottom Line
Chewy’s earnings estimates have trended heavily in the wrong direction since its recent release, with its Most Accurate Zacks estimates (the most recent) coming in way below its recently-lowered consensus estimates. These downward revisions help CHWY land a Zacks Rank #5 (Strong Sell) right now. And its Consumer Products – Staples industry is in the bottom 5% of over 250 Zacks industries right now.
Chewy stock did jump at the end of last week, following a post-release selloff. The positivity continued Monday, but CHWY is still trading below where it was before its Q3 release and remains over 50% under its mid-February records.
Chewy’s recent pop could be linked to some technical-focused trading, after it fell into oversold RSI territory (30 or under) last Thursday. The stock could continue to gain some momentum, but it’s still miles under its 50-day and 200-day moving averages.
Chewy might be more of a day trader-style stock until it can sustain a bit more of a comeback. And it’s worth pointing out that Wall Street is currently betting rather heavily against the stock—short interest at roughly 20% of the float.
Media Contact
Zacks Investment Research
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https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.