Yahoo Finance HanesBrands (HBI) Looks Attractive: Stock Up 18% in 6 Months
HanesBrands Inc. HBI has seen a notable 18.3% increase in its share value over the past six months, outperforming the industry’s decline of 19.4%. In the same time frame, HBI's growth has outpaced the broader Zacks Consumer Discretionary sector, which experienced modest growth of 0.9%.
This significant outperformance can be largely attributed to HanesBrands' enhancements in its operating and financial models, particularly through the development of brand building, data analytics, inventory management and SKU discipline capabilities. A focus on innovative launches, combined with investments in brand marketing, has been beneficial for the company.
The company’s proactive approach has been validated by upward revisions in earnings estimates, increasing by 2 pennies from 44 cents to 46 cents over the past 60 days. This suggests significant growth from the year-ago period’s figure of 6 cents. The stock's appealing Value Score of B adds to its attractiveness, signaling positive prospects for potential appreciation.
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Factors Fueling HBI's Success
Despite ongoing challenges in global apparel sales due to constrained consumer spending, HanesBrands remains focused on strengthening its market-leading innerwear segment. Its customer-centric approach continues to drive market share gains and outperformance. The company is rolling out exciting new consumer-driven innovations like Maidenform M, Bonds Shape Of, and the next phase of the successful Hanes Originals platform, SuperSoft, which positions the company for a record year of innovation in 2024.
Looking at the progress, the extended collaboration between HanesBrands and Wipro has been working well. This partnership is centered on boosting HanesBrands' digital transformation, business growth, and long-term profitability. Wipro will bring its expertise in application management, cybersecurity, intelligent automation, and artificial intelligence (AI) to support HanesBrands' initiatives under the new agreement.
HanesBrands has maintained a resilient financial model with strong margins and consistent cash generation. Over the last three years, the company has taken strategic actions to enhance its operational and financial frameworks. This includes advancing capabilities in brand development, data analytics, and refining inventory management and SKU discipline. Additionally, the company has been focused on talent acquisition and streamlining the supply chain and has successfully reduced fixed costs by over $200 million, a significant portion of which were SG&A expenses.
During the first quarter of 2024, the adjusted gross margin climbed to 39.9%, marking a substantial uptick of nearly 720 basis points. This improvement was largely due to reduced input costs stemming from moderate inflation in commodities and ocean freight. Furthermore, the impact of cost-saving initiatives and favorable shifts in the business mix further bolstered the margin.
Final Thoughts
The above positive factors combined have contributed to the strong performance of HanesBrands, allowing it to outpace its industry peers and the broader consumer discretionary sector, also positioning it well for future growth. Due to these factors, this Zacks Rank #1 (Strong Buy) stock has emerged as a highly attractive investment.
3 Other Picks You Can’t Miss
We have highlighted three other top-ranked stocks from the same industry, namely, G-III Apparel Group GIII, Crocs, Inc. CROX and Guess GES.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel has a trailing four-quarter earnings surprise of 571.8%, on average. The Zacks Consensus Estimate for GIII’s fiscal 2024 revenues indicates an increase of 3.3% from the year-ago period’s reported level.
Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 17.1%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings implies an improvement of 4.3% and 5.6%, respectively, from the prior-year actuals.
Guess designs, markets, distributes and licenses casual apparel and accessories for men, women and children, per the American lifestyle and European fashion sensibilities. GES carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Guess’ current financial-year sales suggests growth of 11.7% from the year-ago reported figures. GES has a trailing four-quarter earnings surprise of 31%, on average.
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Hanesbrands Inc. (HBI): Free Stock Analysis Report
Guess?, Inc. (GES): Free Stock Analysis Report
Crocs, Inc. (CROX): Free Stock Analysis Report
G-III Apparel Group, LTD. (GIII): Free Stock Analysis Report
