Hanesbrands Reaches 52-Week High - Analyst Blog

Shares of Hanesbrands, Inc. ( HBI ) reached a new 52-week high of $53.13 on Jul 8 on the back of bright prospects for 2013, driven by the company's plans to roll out new products.

Shares of this textile retailer closed at $52.59 on Jul 8, recording a healthy return of 48.3% on a year-to-date basis. The company's long-term estimated EPS growth rate is 14%. Average volume of shares traded over the last three months came in at approximately 644K.

Growth Drivers

Hanesbrands plans to stick to its 'Innovate to Elevate' strategy that helped it to achieve higher unit selling prices and lower unit costs, thus contributing to margin enhancement and improved profitability in 2013. Further, Hanesbrands' focus on innovation, emphasis on higher-priced and higher-margin products, lower cotton costs and prudent expense management is expected to drive solid results in 2013.

The company also has substantial cash flows, which will create many opportunities for increasing shareholder returns. Hanesbrands initiated a regular quarterly dividend payment of 20 cents in Apr 2013 and intends to make dividend payout of 20% to 25% of free cash flow in the coming years. The company also plans to engage in acquisitions and share repurchases in order to maximize the value of cash flows.

Hanesbrands reported first-quarter 2013 earnings of 51 cents compared to a loss of 25 cents in the comparable prior-year quarter. The upswing was driven by lower cotton costs and disciplined cost management. Earnings also beat the Zacks Consensus Estimate by 1.9%. In fact, Hanesbrands has topped earnings estimates in the last five quarters.

Gross margin increased 140 basis points (bps) in the quarter on the back of positive pricing and closure of underperforming businesses. Operating margin also expanded 790 bps to 9.0% on the back of lower cotton costs, positive pricing and success of the Innovate-to-Elevate strategy.

Other Stocks to Consider

Hanesbrands holds a Zacks Rank #3 (Hold). Other stocks in the textile and apparel industry that are also worth considering are Michael Kors Holding Ltd ( KORS ), G-III Apparel Group Inc ( GIII ) and PVH Corp ( PVH ), all of them carrying a Zacks Rank #2 (Buy).

G-III APPAREL (GIII): Free Stock Analysis Report

HANESBRANDS INC (HBI): Free Stock Analysis Report

MICHAEL KORS (KORS): Free Stock Analysis Report

PVH CORP (PVH): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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