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D.A. Davidson and C.L. King Upgrade HanesBrands to ‘Buy’


Dec. 20 2016, Updated 7:37 a.m. ET

Price movement

HanesBrands (HBI) fell 5.9% to close at $21.55 per share during the second week of December 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -5.9%, -15.5%, and -25.5%, respectively, as of December 16. HBI is trading 8.1% below its 20-day moving average, 10.8% below its 50-day moving average, and 17.6% 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 YTD price movement of JKH was 6.3% on December 16. The market caps of HanesBrands’ competitors are as follows:

  • L Brands (LB) — $20.0 billion
  • Ralph Lauren (RL) — $7.8 billion
  • Gildan Activewear (GIL) — $6.5 billion

HBI’s rating

On December 12, 2016, D.A. Davidson upgraded HanesBrands’ rating to “buy” from “neutral” and set the stock’s price target at $29 per share. C.L. King upgraded the company’s rating to “buy” from “neutral.”

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Performance of HanesBrands in fiscal 3Q16

HanesBrands (HBI) reported fiscal 3Q16 net sales of $1.8 billion, a rise of 10.7% over the net sales of $1.6 billion reported in fiscal 3Q15. The company’s gross profit margin expanded 40 basis points, and its operating margin narrowed 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 in fiscal 3Q15. It reported adjusted EPS of $0.56 in fiscal 3Q16, a rise of 12.0% over fiscal 3Q15. HanesBrands’s cash and cash equivalents and inventories rose 41.0% and 10.5%, respectively, between fiscal 4Q15 and 3Q16.


HanesBrands made the projections for fiscal 2016:

  • net sales of $6.15 billion–$6.18 billion
  • non-GAAP (generally accepted accounting principles) EPS of $1.89–$1.92
  • non-GAAP operating profit of $940 million–$955 million

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

  • net sales of $1.70 billion–$1.73 billion
  • non-GAAP operating profit of $276 million–$291 million
  • non-GAAP EPS of $0.57–$0.60

In the next part, we’ll look at Apple (AAPL).


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