Gildan Activewear - Momentum
Shares of Gildan Activewear Inc. ( GIL ) 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 marketing programs.
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 million.
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 103.2%.
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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