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Stifel has reaffirmed its Hold rating on shares of Hanesbrands Inc. (NYSE:HBI) with a steady price target of $6.00.
The firm's analyst has updated their model for HBI to incorporate new information following the sale of the global Champion business to Authentic Brands Group, completed on September 30, 2024.
The adjustments to the model include additional details on Champion Japan royalty expenses, debt issuance cost treatment, and a revised presentation of the most recent balance sheet.
Hanesbrands has confirmed its plan to reduce its debt by approximately $1 billion in the second half of 2024, which includes funds from the Champion transaction.
The company has also expressed confidence in its ability to deliver strong returns to shareholders in the coming years. This optimism is based on anticipated revenue growth, margin improvement, double-digit growth in earnings per share, and continued efforts to reduce debt levels.
In other recent news, Hanesbrands Inc. has been making strategic changes to its operations. The company has announced the departure of Vanessa LeFebvre, President of Activewear – Global, in line with the sale of its global Champion business to Authentic Brands Group. This transition comes as part of a broader strategic realignment, which includes the divestiture of its U.S. outlet store business.
Hanesbrands' recent financial performance shows a 4% decrease in net sales to $995 million, but improvements in gross and operating margins, which rose to 39.8% and 12.7% respectively. The company is projecting a decrease in sales by 2% for the full year, but expects a 36% increase in operating profit.
In its effort to drive growth, Hanesbrands has implemented cost reduction initiatives that focus on technology, supply chain optimization, and SG&A savings. The company anticipates a significant increase in EPS in the coming years, driven by these cost reductions, margin expansion, and strategic brand investments. Hanesbrands also expects to generate over $400 million in operating cash flow in the future.
InvestingPro Insights
Recent InvestingPro data offers additional context to Stifel's analysis of Hanesbrands Inc. (NYSE:HBI). The company's market capitalization stands at $2.43 billion, reflecting its current market valuation. Despite Stifel's Hold rating, InvestingPro Tips highlight some positive aspects: net income is expected to grow this year, and analysts predict the company will be profitable this year. This aligns with Hanesbrands' own projections of double-digit earnings per share growth.
The stock has shown strong performance, with a 80.89% price total return over the past year and a 44.56% return in the last three months. This robust momentum is consistent with the company's optimistic outlook and debt reduction plans mentioned in the article.
However, investors should note that Hanesbrands' P/E ratio is currently negative at -75.72, reflecting recent profitability challenges. The company's revenue for the last twelve months was $5.49 billion, with a slight growth of 8.45%, though quarterly revenue showed a decline of 3.83%.
For those seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Hanesbrands, providing a deeper understanding of the company's financial health and market position.
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