Gildan Activewear Inc.
) have been climbing over the past year and hit a 52-week high on
December 31, 2012. This Zacks #1 Rank (Strong Buy) manufacturer and
marketer of basic family apparel continues to gain momentum through
new strategic development programs, advancements in its branded
programs for Gildan and Gold Toe, and future advertising and
Solid Quarter, Strong Outlook
On November 29, Gildan Activewear reported fiscal fourth-quarter
earnings per share of 80 cents, in line with the Zacks Consensus
Estimate and substantially up from 43 cents last year. The upside
came on the back of a considerable decline in cotton prices,
elevated volumes for Printwear unit sales, a favorable product-mix,
higher selling prices for Branded Apparel, and the initial
accretion from the acquisition of Anvil Holdings Inc.
Net sales of $561.7 million were almost in line with the Zacks
Consensus Estimate of $561.0 million, and grew 16.6% year over
year. The company's sales benefited from a 7.5% increase in
Printwear segment sales to $376.8 million and a 41% increase in
Branded Apparel segment sales to $184.8 million.
Gross margin expanded 790 basis points to 28.5%, driven by cheaper
cotton costs, a favorable product mix and higher selling prices for
Branded Apparel. However, this was offset by lower prices, an
unfavorable product mix at the Printwear segment and increased
manufacturing input costs.
Gildan Activewear expects earnings per share between $2.60 and
$2.70 for fiscal 2013, with net sales of about $2.1 billion.
Segment-wise, sales for the Printwear and Branded Apparel segments
are projected to be $1.4 billion and $0.7 billion, respectively.
For the first quarter of fiscal 2013, earnings per share are
anticipated at 28 cents to 31 cents with net sales of about $400
Earnings Estimates on the Rise
The Zacks Consensus Estimate for fiscal 2013 rose 8.6% to $2.66 per
share in the past 60 days, representing year-over-year growth of
The Zacks Consensus Estimate for fiscal 2014 advanced 1.7% to $3.02
over the same time frame, as 8 of 12 estimates moved higher. This
reflects a year-over-year increase of 13.5%.
Gildan Activewear currently trades at a forward P/E of 13.5x,
reflecting a 22.6% discount to the peer group average of 17.5x.
However, on a price-to-book basis, shares are trading at 3.1x, a
29.2% premium to the peer group average of 2.4x. Nevertheless, the
company's compelling fundamentals are well supported by its
long-term estimated EPS growth rate of 13.3%.
Shares of Gildan Activewear have been continuously rising,
recording year-over-year growth of 86.3%. Currently close to its
52-week high, shares of Gildan Activewear have been trading above
the 200 day moving average since June 6, 2012. The stock is also
trading above its 50-day moving average since November 16, 2012.
Additionally, the company has outperformed the S&P 500 Index
since January 10, 2012.
Gildan Activewear is a manufacturer and seller of apparel products,
primarily in the United States, Canada and Europe. The company
sells quality branded basic family apparel, including T-shirts,
fleece, sport shirts, socks and underwear. The company markets its
products under a diversified portfolio of company-owned brands,
including the Gildan, Gold Toe and Anvil brands and brand
extensions, as well as under licensing arrangements for the Under
Armour and New Balance brands. Gildan Activewear has a market cap
of 4.45 million.
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