Hanesbrands (HBI) Looks Promising: Rallies More Than 30% YTD
Hanesbrands (HBI) is benefiting from its Full Potential plan. Also, higher store traffic is driving the company, which recently raised its 2021 guidan...
Things appear to be quite bright for Hanesbrands Inc. HBI, which has seen its shares rally 31.2% so far this year, outdoing the industry’s growth of 18.1%. The company also outdid the Zacks Consumer Discretionary sector, which declined 2.6% in the same time frame. The Zacks Rank #2 (Buy) company is seeing higher store traffic, with things opening up and people stepping out. This aided the company’s second-quarter 2021 results, wherein the top and the bottom line beat the Zacks Consensus Estimate and grew year over year. Management also raised its 2021 view.
Robust momentum in the global innerwear and activewear businesses along with gains from the Full Potential plan have been driving the company. Hanesbrands’ focus on growing its online business forms an important part of the abovementioned plan. The Zacks Consensus Estimate for 2021 earnings has moved up from $1.58 per share to $1.70 over the past 30 days. Let’s delve deeper into the factors working in favor of this company, which is engaged in designing, manufacturing, sourcing and selling basic apparel.
Hanesbrands Inc. Price, Consensus and EPS Surprise
Stellar Q2 & Perked Up Guidance
Hanesbrands posted second-quarter 2021 adjusted earnings of 47 cents a share that surpassed the Zacks Consensus Estimate of 39 cents. The metric increased from 46 cents and 38 cents reported in second-quarter 2020 and second-quarter 2019, respectively. Net sales advanced 13% to $1,751.3 million and outpaced the Zacks Consensus Estimate of $1,579 million. Excluding personal protective equipment or PPE, sales soared 88% on robust point-of-sales trends, gains from government stimulus and favorable comparisons with the pandemic-related shutdowns in the same period last year.
Encouraged by its strong business momentum, management hiked the guidance for 2021. For 2021, net sales are anticipated to be $6.75-$6.85 billion, up from the earlier mentioned range of $6.2-$6.3 billion. The estimated range includes $116 million in benefits from favorable currency rates. The midpoint of the guidance suggests nearly 11% year-over-year net sales growth and a 13% rise from that reported in 2019. Adjusted operating profit is likely to be $880-$910 million, up from the previously communicated $815-$845 million. At the midpoint, this indicates 15% year-over-year growth and a 9% rise from the figure reported in 2019. Adjusted earnings per share are envisioned to be $1.68-$1.76 for 2021, up from the earlier mentioned $1.51-$1.59.
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Focus on Full Potential Plan
Hanesbrands is progressing well with its Full Potential plan, which was unveiled in May 2021. The plan is designed on four pillars, namely, grow global Champion, re-ignite innerwear growth, drive consumer-centricity and focus on the portfolio. To this end, the company expects Champion to become a global brand worth $3 billion by 2024. The company expects to achieve this objective by forming deeper connections with consumers, undertaking impressive innovations, growing presence in key geographies along with expanding online channels, including Champion.com.
Further, management anticipates global innerwear revenue growth of nearly $200 million by 2024, led by sales in the United States and Australia. The company expects to drive global Innerwear growth by using new capabilities in global design, robust innovation and an enhanced contemporary voice. Through its consumer-centricity objective, the company expects to drive growth by presenting innovative products, increasing awareness via higher brand marketing as well as making strategic investments in digital capabilities, including online marketing and advanced analytics. Lastly, focusing on the portfolio will help Hanesbrands in simplifying its business.
Hanesbrands is focused on making incremental investments in its online business to keep pace with consumers’ evolving shopping patterns, especially as the coronavirus pandemic has increased digital shopping penetration. In fact, driving e-commerce excellence is a core part of the company’s Full Potential plan. The company is making efforts to create e-commerce excellence across all online channels. It is on track to make investments in technology, data science and core digital capabilities to deliver growth in traditional and online retail partners as well as owned and partner retail stores in key markets along with its owned e-commerce sites.
3 Other Robust Apparel Picks
Ralph Lauren RL has a projected long-term earnings growth rate of 15% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Columbia Sportswear COLM has a Zacks Rank #1 and a projected long-term earnings growth rate of 33.5%.
Guess? GES has a Zacks Rank #1 and its bottom line has outperformed the Zacks Consensus Estimate by a wide margin in the trailing four quarters, on average.
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