Hanesbrands Hits a 52-Week High - Analyst Blog

Shares of Hanesbrands, Inc. HBI reached a new 52-week high of $76.26 on Mar 26. Share prices have been soaring ever since the company held investor meeting last month where it announced that it will continue with its Innovate-to-Elevate strategy which has been helping it to reap profits for the past few years. Shares of this textile retailer eventually closed at $75.61, recording a healthy year-to-date return of 68.7%.

Growth Drivers

Hanesbrands highlighted its Innovate-to-Elevate strategy in its investor call held last month. It also announced that there are several product launches in the pipeline for fiscal 2014. The company also indicated strategic acquisitions in the upcoming year.

Hanesbrands upped its guidance for fiscal 2014 during its fiscal 2013 earnings conference call last month. It now expects earnings per share in the range of $4.60 to $4.80, higher than $4.25 to $4.50 expected previously.

Hanesbrands plans to stick to its ‘Innovate to Elevate' strategy that helped it to achieve higher unit selling prices and lower unit costs. The strategy has this helped Hanesbrands to increase its adjusted operating profit margin by 400 basis points over the past five years

Moreover, it has generated $1.9 billion in cumulative cash from operations over the same time frame. This substantial amount of cash helped the company to prepay its debts, initiate a regular quarterly cash dividend, and acquire Maidenform Brands, Inc. During its investor meeting last month, Hanesbrands announced that it plans to use the cash for further acquisitions to generate value.

Further, Hanesbrands' focus on innovation, emphasis on higher-priced and higher-margin products, lower cotton costs and prudent expense management are expected to drive solid results in 2014.

Hanesbrands sports a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the textile-apparel sector include Joe's Jeans Inc. JOEZ, Michael Kors Holdings Ltd KORS and Columbia Sportswear Co. COLM. While Michael Kors carry the same Zacks Rank as Hanesbrands, Columbia Sportswear and Joe's Jeans have a Zacks Rank #2 (Buy).