Hanesbrands (NYSE:HBI) stock is getting a boost on Wednesday after the innerwear apparel company announced it will sell the Champion brand. Hanesbrands has agreed to sell the Champion brand to Authentic Brands Group for $1.2 billion. The deal could increase to $1.5 billion if a contingent cash consideration of up to $300 million is fulfilled. This requires the brand to reach performance goals after the sale. Hanesbrands notes that it will receive net proceeds of $900 million from this deal. The company says ...

Core Viewpoint - Hanesbrands has agreed to sell its global Champion business to Authentic Brands Group for a transaction valued at $1.2 billion, with potential to reach $1.5 billion based on performance thresholds [1][2]. Group 1: Transaction Details - The deal includes a contingent cash consideration of up to $300 million if certain performance thresholds are met [1]. - Hanesbrands expects to receive net proceeds of $900 million from the transaction, which will be used to accelerate debt reduction [1][2]. Group 2: Financial Impact - Following the announcement, Hanesbrands shares surged approximately 12% during premarket trading [2]. - As of the end of Q1 2024, Champion generated around $75 million of adjusted EBITDA [2]. Group 3: Strategic Context - The agreement was unanimously approved by Hanesbrands' board of directors and follows months of consideration regarding the sale of Champion [3]. - The decision to consider selling Champion was influenced by pressure from activist firm Barington Capital Group to cut costs and generate cash amid declining sales [4].

Investors interested in Consumer Discretionary stocks should always be looking to find the best-performing companies in the group. Is HanesBrands (HBI) one of those stocks right now? Let's take a closer look at the stock's year-to-date performance to find out. HanesBrands is one of 285 individual stocks in the Consumer Discretionary sector. Collectively, these companies sit at #9 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individual ...

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks. Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find comp ...

Group 1 - HanesBrands (HBI) has reached a key level of support and recently broke out above the 50-day moving average, indicating a short-term bullish trend [1] - HBI has rallied 14.3% over the past four weeks and currently holds a Zacks Rank 1 (Strong Buy), suggesting potential for further upward movement [2] - Positive earnings estimate revisions for HBI strengthen the bullish outlook, with no estimates decreasing in the past two months and one estimate increasing [3] Group 2 - The 50-day simple moving average is a significant indicator for traders and analysts to identify support or resistance levels, marking the beginning of an up or down trend [2] - The consensus estimate for HBI has increased, further supporting the case for potential gains in the near future [3]

Core Viewpoint - Hanesbrands is experiencing a recovery in profitability driven by cost reductions, but faces significant revenue challenges across all segments, particularly with Champion brand, leading to a Hold rating on the stock [2][3][27] Financial Performance - In 1Q24, all segments of Hanesbrands reported negative revenue results, with Champion experiencing a 25% year-over-year decline [4] - The innerwear segment, primarily Hanes in the US, saw an 8% decrease, while the international segment declined by 9% [5] - Despite revenue declines, gross margins improved by 770 basis points year-over-year due to cost reductions in cotton and freight [6] - Adjusted operating margin for 1Q24 is estimated at 9% after accounting for restructuring charges and increased marketing expenses [7][8] Champion Brand Sale Considerations - Management did not provide updates on the potential sale of Champion, although there are rumors of interest from Authentic Brands at a price between $1 billion and $1.5 billion [9][10] - Champion's global sales are estimated to have fallen to approximately $1.5 billion from a peak of $2 billion in FY21 [13] - The potential sale could impact revenues significantly, with estimates suggesting a decrease of $1.5 billion in revenues and a reduction in operating income by $120 million if sold [22] Valuation Insights - Hanesbrands currently has a market cap of $1.8 billion and an enterprise value (EV) of $4.85 billion, with a suggested EV/NOPAT multiple of 15x deemed excessive for the company’s current challenges [14][18] - If Champion is sold for $1 billion, the adjusted EV would be $3.85 billion, leading to a P/E ratio of 13.8x, which is still considered high given the company's circumstances [25][26] Future Outlook - The company reaffirmed its FY24 guidance, projecting revenues of approximately $5.4 billion and operating income of about $430 million [8] - There are potential upside risks, including a higher sale price for Champion, lower-than-expected sales and profits post-sale, or a successful turnaround of the Champion brand [28][29][30]

Core Insights - The article emphasizes the importance of value investing as a strategy to identify strong stocks in various market conditions [2][3] - Hanesbrands (HBI) is highlighted as a stock currently attracting investor attention, with a strong Zacks Rank and favorable valuation metrics [4][7] Valuation Metrics - HBI has a Forward P/E ratio of 9.32, significantly lower than the industry average of 12.02, indicating potential undervaluation [4] - The stock's P/B ratio stands at 5.16, compared to the industry's average of 6.43, suggesting a solid valuation relative to its book value [5] - HBI's P/S ratio is 0.32, which is lower than the industry's average of 0.7, reinforcing the notion of undervaluation [6] Investment Outlook - The combination of HBI's strong earnings outlook and favorable valuation metrics positions it as one of the strongest value stocks in the market [7]

Hanesbrands Inc. (HBI) reported mixed first-quarter 2024 results, with the top line declining year over year and missing the Zacks Consensus Estimate. The bottom line improved from the year-ago quarter’s reported figure and surpassed the consensus mark. Management reaffirmed its 2024 guidance.Q1 in DetailThe company posted an adjusted loss from continuing operations of 2 cents per share, narrower than the Zacks Consensus Estimate, which was pegged at a loss of 6 cents. The metric improved from a loss of 6 c ...

Financial Data and Key Metrics Changes - Net sales for Q1 2024 were $1.16 billion, a decrease of $233 million or nearly 17% compared to the prior year, with adjustments accounting for approximately 10% decline year-over-year [24][25] - Gross margin improved to 39.9%, up 720 basis points from the previous year, driven by lower input costs and cost-saving initiatives [27][28] - Operating margin for the quarter was 7.3%, an increase of 270 basis points over last year [28][29] - Earnings per share for the quarter was a loss of $0.02, which was better than expected [29] Business Line Data and Key Metrics Changes - U.S. Innerwear sales decreased by 8% compared to the prior year, with a 50 basis point market share gain [25][16] - U.S. Activewear sales decreased approximately 31%, with two-thirds of the decline attributed to timing-related items from the previous year [26] - Global Champion sales decreased 25% on a constant currency basis, with the transition of the kids' business to a license model accounting for a significant portion of the decline [17] Market Data and Key Metrics Changes - International sales decreased by 9% in constant currency, with growth in Latin America, Japan, and China offset by declines in Europe and Australia [27] - The U.S. e-commerce business was up 12% in the first quarter, indicating a positive trend in that channel [84] Company Strategy and Development Direction - The company is increasing brand marketing investments to support innovation and build relevance with younger consumers [9][10] - A focus on the Champion brand's performance enhancement plan is underway, with strategic collaborations and new product offerings [10][11] - The company aims to reduce debt and enhance shareholder value through a lower fixed-cost structure and improved operating models [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full-year operating profit guidance of $500 million to $520 million, despite a challenging consumer environment [32][39] - The macro consumer environment is expected to remain challenging, but management anticipates a gradual improvement in sales trends throughout the year [31][32] - Management believes the underlying financial model is strong, with healthy margins and consistent cash generation expected to drive future growth [18][20] Other Important Information - The company has taken out more than $200 million in fixed costs over the past three years, contributing to improved financial flexibility [18] - The process of evaluating strategic alternatives for the Global Champion business is ongoing, with strong interest from various parties [11][67] Q&A Session Summary Question: Can you elaborate on the visibility into the company's profit recovery? - Management expressed high confidence in the operating profit guidance, expecting year-over-year improvement in margins despite a challenging environment [39] Question: What are the expectations for gross margin for the rest of the year? - Management is confident in maintaining a gross margin of 38.5% to 39% for the remainder of the year, with good visibility on input costs [44] Question: Are there differences in trends in Australia? - Management noted some improvement in Australia, particularly in the wholesale business, and expects the business to rebound in the second half of the year [65] Question: What are the brand marketing investments focused on? - The company is concentrating marketing investments on innovation and brand strengthening, with a significant increase in advertising for new product launches [71] Question: What is the outlook for the U.S. Innerwear segment? - Management expects a moderating trend in the U.S. Innerwear segment, guiding for a 3% to 4% year-over-year decline in Q2 [60] Question: Will the company maintain control of Champion? - Management confirmed that the evaluation process for Champion is ongoing, with no announcements regarding a sale at this time [67]

For the quarter ended March 2024, HanesBrands (HBI) reported revenue of $1.16 billion, down 16.8% over the same period last year. EPS came in at -$0.02, compared to -$0.06 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $1.17 billion, representing a surprise of -1.44%. The company delivered an EPS surprise of +66.67%, with the consensus EPS estimate being -$0.06.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Stre ...