The leading apparel retailer,
), announced that it will initiate its dividend payback policy.
In the recently held Investor Day conference call, the company
announced that it will pay a regular quarterly dividend of 20
cents per share starting from June 3, 2013 to stockholders of
record at the close of business on May 20, 2013. The annualized
dividend per share stands at 80 cents per share. The dividend
yield is 58.6%.
HANESBRANDS INC (HBI): Free Stock Analysis
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The initiation of the quarterly dividend is a part of the
company's cash deployment strategy. The apparel chain is settled
in a solid free cash flow position with a price to free cash flow
ration of 10. Hanesbrands intends to use almost 20% to 25% of its
free cash flow to pay dividend.
Winston-Salem, NC-based Hanesbrands is geared to maximize returns
to shareholders. Apart from paying in the form of dividends, the
company also intends to repurchase shares, although it is yet to
formulate its share buyback strategy.
Signs of economic recovery have made share buybacks and dividend
increases a common factor among companies with ample cash. Apart
from enhancing shareholders' return, an attractive dividend
payment strategy lifts the market value of the stock.
In the conference call, Hanesbrands highlighted its Innovate to
Elevate Strategy as a part of boosting its earnings. The Innovate
to Elevate strategy aims at using product innovation to enhance
the brand value of the company. The company also revealed that
apart from paying dividends and buying back shares, the company
will use its cash for bolt-on acquisitions.
For the first quarter 2013, Hanesbrands expects sales to be $945
million. Operating profits are expected between $82 million and
$85 million for the quarter. Earnings are expected to lie within
the range of $0.48 to $0.51 per share.
For full year 2013, the company reaffirmed its sales guidance of
$4.6 billion. It expects operating profits between $500 million
to $550 million for the year. Earnings are expected to lie within
the band of $3.25 to $3.40 per share.
Hanesbrands engages in marketing innerwear, outerwear and hosiery
apparel and carries a Zacks Rank #2 (Buy). Other stocks in the
same industry that worth a look include
Michael Kors Holding Limited
Joe's Jeans Inc.
Ralph Lauren Corporation
). All of them carry a Zacks Rank #2 (Buy).