Shares of Hanesbrands, Inc. (HBI) reached a new 52-week high of $112.74 on Nov 20, 2014. Share prices have been soaring ever since the company reported strong third-quarter fiscal 2014 results on Oct 29, 2014 compared to last year and raised the fiscal 2014 outlook. Shares of this textile retailer eventually closed at $111.54, recording a healthy year-to-date return of 58.73%.
Growth Drivers
Hanesbrands’ third-quarter fiscal 2014 earnings per share of $1.73 beat the Zacks Consensus Estimate by a penny and also increased 41% from the prior-year quarter.
Profit was driven by strong sales and higher margins backed by the success of the Innovate-to-Elevate strategy. Increased supply chain operating efficiencies and lower selling, general and administrative costs also added to earnings growth.
Although sales of $1.4 billion marginally missed the Zacks Consensus Estimate by 1.4%, it gained 17% year over year. The Maidenform acquisition, completed in fiscal 2013, contributed almost $115 million to total quarterly sales, while the DB Apparel (DBA) takeover, completed in Aug 2014 contributed $81 million. Sales in all the business segments gained momentum.
Investors are also encouraged as Hanesbrands raised the full-year fiscal 2014 earnings outlook following strong business momentum in the first three quarters of the fiscal year. The company expects the business momentum to continue through the rest of 2014 backed by the Innovate-to-Elevate strategy and back-to-back acquisitions. Hanesbrands updated its outlook for fiscal 2014 on Sep 3 following the DBA takeover.
Hanesbrands now expects earnings per share in the range of $5.55 to $5.65 up from $5.40 to $5.60. The company expects operating profits within $750 to $770 million as against $735 to $755 million.
Other Stocks to Consider
Hanesbrands has a Zacks Rank #2 (Buy). Other stocks worth considering in the textile-apparel sector include Gildan Activewear Inc. (GIL), Michael Kors Holdings Ltd. (KORS) and Columbia Sportswear Co.(COLM). All these stocks carry a Zacks Rank #2.
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