HanesBrands (
NYSE:HBI), known throughout the world for its activewear and leading brand names, delivered an earnings report that mostly beat expectations. HanesBrands did, however, issue some cautions going forward, which was enough to send the stock down 11.3% at one point in premarket trading amid vastly lower volumes than average. HanesBrands won't be taking those conditions quietly, however, as the company also released a plan to drive further sales momentum, supported by bullish outlooks from the analyst community.
A Thoroughly Solid Earnings Report
HanesBrands' earnings report represented solid numbers and even some gains over preceding quarters. Revenue amounted to $1.51 billion for the quarter, which was up 25% against the same quarter the previous year and beat Zacks estimates by a narrow 0.67%. When viewed in terms of constant-currency figures, first-quarter net sales were up 22%, suggesting that currency issues didn't have much to do either way with the company's sales figures.
The company posted earnings of $0.39 per share, readily beating Zacks estimates of $0.26 per share and vastly outstripping earnings of $0.05 posted this time last year. HanesBrands has been routinely posting beats on earnings; reports note that this is the fourth time the company has surpassed estimates in the last four quarters.
While the company saw growth in all of its business segments, the word from the company's CEO, Steve Bratspies, pointed particularly to growth in the company's innerwear operations as well as the rising value of HanesBrands Champion brand worldwide. Bratspies also noted that global online sales were up over 80%, and the company's focus on innovating in product lines and developing proper marketing to support said products delivered clear value.
The company's forecasts, however, proved to be lower than what analysts were expecting, both going into the latest quarter and for the full-year 2021. However, HanesBrands will not be taking this lightly, as the company rolled out a new three-year plan known as Full Potential, a plan for growth despite to push up operating margins to 14.3% and add $1.2 billion in incremental revenue. The Full Potential plan calls for further investment in the company's primary markets, driving growth in women's and kids' apparel, moving into the casual footwear market, and augmenting the online experience found at Champion.com.
What Do Financial Analysts Think About HanesBrands Stock?
HanesBrands clearly has a plan to address the future, and that's a point quite in favor with financial analysts. The analyst community, as based on our latest research, has been revising its opinion toward the bullish since last October, when the company shifted from a “hold” consensus to a “buy” consensus.
A year ago, the company had one “strong buy” rating, three “buy”, six “hold” and one “sell” to its credit. Six months ago, that shifted to one “strong buy”, four “buy”, four “hold” and one sell.” Today, we have one “strong buy”, four “buy”, three “hold” and no sell ratings, representing an increasingly bullish pattern.
Price targets, meanwhile, exist in a fairly narrow range. The current average of $18.71 is bookended by a high of $26 and a low of $14. That does represent some downside potential as the company's stock currently trades at the exact average of $18.71 as of this writing.
Interestingly, there has been little movement in the analyst picture recently. The last major changes were overwhelmingly positive—three upwardly-revised price targets in one day—but all the changes occurred back on February 10. There has been no movement from the analyst community since.
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