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How Has Hanesbrands Performed in 3Q16?

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Nov. 1 2016, Updated 8:07 a.m. ET

Price movement

Hanesbrands (HBI) has a market cap of $9.8 billion. It rose 8.3% to close at $25.77 per share on October 28, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 4.4%, 2.4%, and -11.3%, respectively, on the same day. HBI is trading 3.6% above its 20-day moving average, 0.13% below its 50-day moving average, and 4.2% below its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Mid-Cap Growth Index ETF (JKH) invests 0.66% of its holdings in Hanesbrands. The ETF tracks a market-cap-weighted index of mid-cap companies selected by Morningstar based on their growth characteristics. The YTD price movement of JKH was 0.68% on October 28. The market caps of Hanesbrands’ competitors are as follows:

  • L Brands (LB) — $21.0 billion
  • Ralph Lauren (RL) — $8.2 billion
  • Gildan Activewear (GIL) — $6.0 billion

Performance of Hanesbrands in fiscal 3Q16

Hanesbrands reported fiscal 3Q16 net sales of $1.8 billion, a rise of 10.7% over the net sales of $1.6 billion in fiscal 3Q15. Sales from the activewear and direct-to-consumer segments fell 2.1% and 11.0%, respectively, and sales from the innerwear and international segments rose 2.0% and 59.2%, respectively, between fiscal 3Q15 and 3Q16. The company’s gross profit margin expanded by 40 basis points, and its operating margin narrowed by ten basis points.

Its net income and EPS (earnings per share) rose to $173.9 million and $0.45, respectively, in fiscal 3Q16, compared with $162.1 million and $0.40, respectively, in fiscal 3Q15. It reported adjusted EPS of $0.56 in fiscal 3Q16, a rise of 12.0% over fiscal 3Q15.

Hanesbrands’ cash and cash equivalents and inventories rose 41.0% and 10.5%, respectively, between fiscal 4Q15 and 3Q16. Its current ratio fell to 1.90x, and its debt-to-equity ratio rose to 5.2x in fiscal 3Q16, compared with 1.94x and 3.4x, respectively, in fiscal 4Q15.

Projections

Hanesbrands has made the projections for fiscal 2016:

  • net sales of $6.15 billion–$6.18 billion
  • EPS of $1.45–$1.49
  • operating profit of $807 million–$822 million
  • non-GAAP (generally accepted accounting principles) EPS of $1.89–$1.92
  • non-GAAP operating profit of $940 million–$955 million
  • net cash from operations of ~$750 million–$800 million

The company has made the following projections for fiscal 4Q16:

  • net sales of $1.7 billion–$1.73 billion
  • non-GAAP operating profit of $276 million–$291 million
  • non-GAAP EPS of $0.57–$0.60
  • net cash from operations of ~$542 million–$592 million

In the next part, we’ll look at Hershey (HSY).

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