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Is Hanesbrands (HBI) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Hanesbrands Inc. (HBI - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Hanesbrands has a trailing twelve months PE ratio of 10.93, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.17. If we focus on the long-term PE trend, Hanesbrands’ current PE level puts it well below its midpoint of 17.41 over the past five years. In fact, it is currently trading close to the lows for the stock, indicating that it could be a superb entry point.
Further, the stock’s PE also compares favorably with the Zacks classified Consumer Discretionary sector’s trailing twelve months PE ratio, which stands at 23.58. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Hanesbrands’ forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Hanesbrands has a P/S ratio of about 1.25. This is much lower than the S&P 500 average, which comes in at 3.12 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Hanesbrands currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Hanesbrands a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Hanesbrands is just 0.60, a level that is far lower than the industry average of 1.35. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, HBI is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Hanesbrands might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘B’. This gives HBI a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen four estimates go lower in the past thirty days compared to no upward revisions, while the full year estimate has seen four upward and no downward revisions in the same time period.
This has had a slightly negative impact on the consensus estimate, as the current quarter consensus estimate has slipped by 3.6% in the past one month, while the full year estimate has remained unchanged. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Given these trends, the stock has just a Zacks Rank #3 (Hold), indicating why we are looking for in-line performance from the company in the near term.
Bottom Line
Hanesbrands is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, this Zacks Rank #3 company belongs the Zacks categorized Textile – Apparel Manufacturing industry, which has underperformed the broader market in the last two years.
Well, this could be mainly attributable to volatile consumer patterns and mounting competition from online businesses. Though the industry is currently battling a tough consumer landscape, it still ranks among the Top 32% of all Zacks industries. This underscores its inherent strength and hints at chances of revival.
So, value investors might want to wait for estimates and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Is Hanesbrands (HBI) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/hbi_20170601%20(1).jpg)
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/hbi_20170601%20(2).jpg)
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/hbi_20170601%20(3).jpg)
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/hbi_20170601%20(4).jpg)
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Hanesbrands Inc. (HBI - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Hanesbrands has a trailing twelve months PE ratio of 10.93, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.17. If we focus on the long-term PE trend, Hanesbrands’ current PE level puts it well below its midpoint of 17.41 over the past five years. In fact, it is currently trading close to the lows for the stock, indicating that it could be a superb entry point.
Further, the stock’s PE also compares favorably with the Zacks classified Consumer Discretionary sector’s trailing twelve months PE ratio, which stands at 23.58. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Hanesbrands’ forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Hanesbrands has a P/S ratio of about 1.25. This is much lower than the S&P 500 average, which comes in at 3.12 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Hanesbrands currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Hanesbrands a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Hanesbrands is just 0.60, a level that is far lower than the industry average of 1.35. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, HBI is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Hanesbrands might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘B’. This gives HBI a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen four estimates go lower in the past thirty days compared to no upward revisions, while the full year estimate has seen four upward and no downward revisions in the same time period.
This has had a slightly negative impact on the consensus estimate, as the current quarter consensus estimate has slipped by 3.6% in the past one month, while the full year estimate has remained unchanged. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Hanesbrands Inc. Price and Consensus
Hanesbrands Inc. Price and Consensus | Hanesbrands Inc. Quote
Given these trends, the stock has just a Zacks Rank #3 (Hold), indicating why we are looking for in-line performance from the company in the near term.
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/hbi_20170601%20(5).jpg)
Bottom Line
Hanesbrands is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, this Zacks Rank #3 company belongs the Zacks categorized Textile – Apparel Manufacturing industry, which has underperformed the broader market in the last two years.
Well, this could be mainly attributable to volatile consumer patterns and mounting competition from online businesses. Though the industry is currently battling a tough consumer landscape, it still ranks among the Top 32% of all Zacks industries. This underscores its inherent strength and hints at chances of revival.
So, value investors might want to wait for estimates and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>