Hanesbrands Jumps After Adjusted Earnings Top Expectations

Hanesbrands shares jumped after the apparel company reported adjusted earnings that exceeded Wall Street's estimates.
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Hanesbrands  (HBI) - Get Report shares jumped on Tuesday after the apparel company posted stronger-than-expected adjusted fourth quarter earnings and first-quarter guidance.

The stock recently traded at $19.45, up 22%. It touched a 52-week high $19.72 on Tuesday. That's more than 2 1/2 times the 52-week low below $7, set in early April.  

Hanesbrands stock has soared 52% in the past three months. That compares with a 12% gain for the S&P 500.

Adjusted earnings per share totaled 38 cents, down from 46 cents a year earlier but above the FactSet analyst consensus of 29 cents. 

Revenue registered $1.8 billion in the latest quarter, up 2.8% from $1.75 billion in the year-earlier quarter. That latest figure, too, beat the analyst consensus: $1.64 billion.

Hanes estimates adjusted earnings of 24 cents to 27 cents a share for the first quarter, topping analysts’ forecast of 19 cents. 

It sees first-period revenue of $1.49 billion to $1.52 billion, besting the analyst consensus of $1.45 billion.

Even before the earnings report, Morningstar analyst David Swartz put fair value for the stock at $24. “Narrow-moat Hanesbrands is the market leader in basic innerwear (59% of its 2019 sales) in multiple countries,” he wrote in November.

“While the Covid-19 crisis has adversely impacted its 2020 results, we think Hanes’ share leadership in replenishment apparel categories puts it in better shape than some competitors. 

"Moreover, Hanes owns its supply chain, which gives it more flexibility in production and costs than others.”

Further, “Hanesbrands has improved its production efficiency over the past 10 years,” Swartz said. 

“The company claims a nearly 90% increase in per-factory output by both units and weight since 2008.” 

He sees the Champion sportwear brand as key to the company’s success.