Should Value Investors Buy HanesBrands (HBI) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is HanesBrands (HBI). HBI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 9.70, which compares to its industry's average of 19.81. Over the last 12 months, HBI's Forward P/E has been as high as 13.35 and as low as 7.64, with a median of 10.77.
Another valuation metric that we should highlight is HBI's P/B ratio of 11.05. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. HBI's current P/B looks attractive when compared to its industry's average P/B of 11.09. Within the past 52 weeks, HBI's P/B has been as high as 16.11 and as low as 3.77, with a median of 10.92.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. HBI has a P/S ratio of 0.92. This compares to its industry's average P/S of 0.97.
Value investors will likely look at more than just these metrics, but the above data helps show that HanesBrands is likely undervalued currently. And when considering the strength of its earnings outlook, HBI sticks out at as one of the market's strongest value stocks.
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Hanesbrands Inc. (HBI): Free Stock Analysis Report
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