Gildan Activewear Inc. Class A Stock Downgraded (GIL)

NEW YORK ( TheStreet) -- Gildan Activewear Inc. Class A (NYSE: GIL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Although GIL's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.90 is somewhat weak and could be cause for future problems.
  • GILDAN ACTIVEWEAR INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, GILDAN ACTIVEWEAR INC increased its bottom line by earning $1.96 versus $1.63 in the prior year.
  • The gross profit margin for GILDAN ACTIVEWEAR INC is currently extremely low, coming in at 8.10%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -15.20% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$110.96 million or 848.97% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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Gildan Activewear Inc. engages in the manufacture and sale of apparel products primarily in the United States, Canada, and Europe. It sells T-shirts, fleece, and sport shirts to wholesale distributors under the Gildan brand name. The company has a P/E ratio of 10.8, below the average consumer non-durables industry P/E ratio of 11.3 and below the S&P 500 P/E ratio of 17.7. Gildan Activewear Inc. Class A has a market cap of $2.69 billion and is part of the consumer goods sector and consumer non-durables industry. Shares are up 18.5% year to date as of the close of trading on Thursday.

You can view the full Gildan Activewear Inc. Class A Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff
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