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Factors Likely to Decide Hanesbrands (HBI) Fate in Q4 Earnings

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Hanesbrands Inc. HBI is scheduled to release fourth-quarter 2019 results on Feb 7, before market open. The provider of apparel essentials has trailing four-quarter positive earnings surprise of 3.1%, on average. 

What to Expect?

The Zacks Consensus Estimate for fourth-quarter 2019 earnings has been stable in the past 30 days at 51 cents, which suggests an improvement of 6.3% from the year-ago quarter’s reported figure. The consensus mark for revenues is pegged at $1,748 million, which indicates a decline of 1.2% from the prior-year quarter’s figure.

Hanesbrands Inc. Price and EPS Surprise

Hanesbrands Inc. Price and EPS Surprise

Hanesbrands Inc. price-eps-surprise | Hanesbrands Inc. Quote

Factors to Note

Hanesbrands has been grappling with sluggishness in its Innerwear segment for quite some time. In fact, management had earlier guided sales decline of 2% in the U.S. Innerwear segment for the fourth quarter. Although management is focused on product launches to combat this hurdle, efforts are yet to yield for the said unit.

Further, the company is exposed to unfavorable foreign currency translations, as nearly one-third of its total sales come from international businesses. Hanesbrands had estimated an impact of $20 million and $123 million on the fourth quarter and fiscal 2019 top line due to adverse currency fluctuations.

In spite of aforementioned headwinds, Hanesbrands is likely to register year-over-year growth in the bottom line, thanks to Project Booster program that aims at driving investment for growth, minimizing costs as well as increasing cash flow. The plan is expected to boost the company’s Sell More, Spend Less, Generate Cash strategy. Management had earlier stated that by 2019, this project is anticipated to produce nearly $150 million of annualized cost savings, of which roughly $50 million will be reinvested in targeted growth opportunities.  

Also, the company is on track with the expansion of its Champions product portfolio along with increasing distribution in China and South Korea. Buoyed by solid demand of Champions activewear products, Hanesbrands projected sales growth to the tune of high teens for the quarter under review in its last reporting quarter. Moving on, Hanesbrands has been gaining from solid performance in the international segment. For the fourth quarter, management anticipates sales growth in the segment. 

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Hanesbrands this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. 

Hanesbrands has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks Poised to Beat Estimates

Here are some companies that you may want to consider, as our model shows that these have the right combination to post an earnings beat:

Zumiez ZUMZ has an Earnings ESP of +0.24% and a Zacks Rank #1.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Crocs CROX has an Earnings ESP of +30.00% and a Zacks Rank #3. 

The Gap (GPS - Free Report) has an Earnings ESP of +5.43% and a Zacks Rank #3. 

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