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How Hanesbrands’ PE Multiple Stacks Up with Peers

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Comparison of PE multiples

On January 7, Hanesbrands’ (HBI) 12-month forward PE ratio was 7.4x. Meanwhile, all its peers are trading at higher forward PEs. VF (VFC), PVH (PVH), Capri Holdings (CPRI), Ralph Lauren (RL), and Under Armour (UAA) have PE ratios of ~18.0x, 9.7x, 8.2x, 14.8x, and 56.7x, respectively. Michael Kors Holdings is now known as Capri Holdings Limited, effective as of January 2.

EPS projections for HBI

For 2018, Wall Street analysts expect Hanesbrands’ adjusted EPS to fall 11.4% YoY to $1.71. Rising expenses and higher taxes will likely continue to mar the company’s bottom line. The Sears bankruptcy could wipe out $0.05 from Hanesbrands’ 2018 bottom line. Also, Hanesbrands has a share buyback plan in place, but it didn’t repurchase any shares in the first nine months of 2018. Share buybacks offer upside to the EPS.

For 2018, management expects adjusted EPS to be $1.69–$1.73. However, increases in sales are expected to offer some cushioning to the bottom line in 2018. For 2019, analysts expect the company’s adjusted EPS to rise 5.3% YoY to $1.80.

A look at EPS projections for peers

Analysts expect PVH’s adjusted EPS to rise by 17.9% YoY to $9.36 in fiscal 2018. For fiscal 2019, its EPS are expected to increase by 9.6% YoY to $10.26. Analysts’ adjusted EPS growth estimate for Ralph Lauren in fiscal 2019 stands at 12.8% to $6.80. For fiscal 2020, its EPS are forecast to rise by 8.3% to $7.36.

For fiscal 2019, Wall Street projects that VFC’s adjusted EPS could increase 18.2% to $3.71. For fiscal 2020, its EPS are forecast to rise by 12.1% to $4.16.

For Capri Holdings fiscal 2019, analysts project EPS to be up by 11.1% to $5.02. For fiscal 2020, EPS are estimated to decrease by 3.4% to $4.85.

Under Armour’s EPS for 2018 and 2019 are expected to increase by 15.8% and 50.0% to $0.22 and $0.33, respectively.

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