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Hanesbrands’ Q3 Top, Bottom Lines Meet Estimates, Miss Guidance

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Hanesbrands’ Q3 Top, Bottom Lines Meet Estimates, Miss Guidance PART 1 OF 4

Hanesbrands Falls despite Meeting 3Q17 Expectations

Series snapshot

Hanesbrands (HBI) reported its 3Q17 results on Wednesday, November 1, 2017. Once again, the North Carolina–based innerwear and activewear manufacturer posted revenue and earnings in line with market expectations. Its EPS (earnings per share) rose 7.1% YoY (year-over-year) to $0.60 on total sales of $1.8 billion (+2.2% YoY).

Hanesbrands Falls despite Meeting 3Q17 Expectations

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However, despite meeting expectations, HBI stock fell 8.8% on the next trading day. Behind this fall was probably the company’s glum guidance for 4Q17.

Management guided sales of $1.63 billion–$1.65 million for the fourth quarter compared to $1.63 billion for the consensus expectation. EPS is likely to fall $0.51–$0.53 compared to the consensus of $0.56.

In this series, we’ll look at Hanesbrands’ performance in the third quarter, its stock performance, and analyst recommendations.

Valuations overview

Hanesbrands is currently trading at a one-year forward PE (price-to-earnings) ratio of 9.9x compared to a three-year average of 14.5x. The company is trading at a discount to almost all of its branded apparel peers. PVH (PVH), Ralph Lauren (RL), and VF Corp (VFC) are trading at 15.2x, 16.6x, and 21.2x, respectively.

About Hanesbrands

Hanesbrands is a global marketer of leading everyday basic apparel. The company’s portfolio includes Hanes, Champion, Playtex, Just My Size, Wonderbra, and Gear for Sports. The company sells bras, panties, shapewear, sheer hosiery, men’s underwear, children’s underwear, socks, sweatshirts, fleece, and other activewear throughout the world.

Investors who want exposure to HBI can consider the Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (RCD), which invests 1.1% of its portfolio in HBI.

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