guys, all of u that have suffered through this downturn, today buy a TON of HBI stock. They just amended their credit agreements, basically will pay just $10MM more in total interest expense but get a TON of ROOM now in terms of their step down, really AWESOME news.
Do you work at Hbi? Because that sounds like a quote from a standard statement that is issued EVERY time the company "restructures"! Just curious. I love reading the posts about whether to buy or sell though. It is comical when you sit in the building every day wondering who gets walked out today? You worry about what stock will do and we wonder how many will lose jobs today.
I feel dirty just being on this post. Does anyone reading this have an idea about what might move this stock. Annual meeting, upgrade from the two firms that cover this stock, anything! My god, you can't all be this incompetent
it is true that no one here knows where the market is headed given the infinite uncertainties.
one thing is absolutely certain though; all of the people here know a hell of lot more than you, an obvious loser destine to continue in your miserable existance!
To all of you guys who think you know what's going to happen to HBI short, medium or long term:
You have no idea what is going to happen to HBI, short, medium or long term. You'd make better use of your time masturbating than writing comments that make you look like wankers.
I own a company stock with a similar situation but in a different industry. I'm going to dump that stock this year. I just hope that I get a better price for it than it is priced now. The buy out value is much greater than the stock price and the stock does nothing for years. Restructuring and debt reduction hasn't helped. It sits with a PE of 4.4.
That all sounds great, tara, in your best case scenario. But what is the worst case scenario? Cash flow hasn't been to good the last couple of years. CapEx and repayment of debt has ate up cash from operations. And I'd like to see revenue growth and I don't see any since the spinoff from Sarah Lee.
Deleveraging is THE STORY behind HBI. HBI margins are 10%. Have you looked at what they did when they were part of Sara Lee? they cranked out EPS of $4+.
HBI stated when it was spun out it would incur $250MM in restructuring over 3 years which it did. HBI and Fruit of the Loom are the only players inthe game, HBI was able to RAISE prices for 2009. These guys are going to pay down AT LEAST $300MM in debt.
Here's a value creation lesson for you. They do $500MM in EBITDA this year, market says pay you 6x for that, they have $2.3B in debt, 95MM shares, you have about $7.35 share price. Now with sales DOWN big and these guys still doing ok overall, in 2009 they will pay down AT LEAST $300MM in debt. In q4 08 mgmt said they'd want to pay around $50MM and they paid nearly $100MM in debt down so these guys can crank up the cash flow.
So in 2009, let's say we have $500MM in EBITDA again, 6x EV/EBITDA but now our debt is only $2B, with 95MM shares the value of HBI is $10.50 with the market payign the SAME multiple for this company even though its credit profile increased. Maybe the market pays 7x that at the end of 2009 when it knows that is the bottom for retail difficulty and the credit scenario isbetter.
TRLG on the other hand is a $5 stock by year end, dead brand that wont be around in 2 years except maybe licensed out of Target. HBI will be wornby your grandkids.
When restructuring costs do go down, savings from restructuring starts to level off. And paying down their debt is good and will increase savings. Hane's has to either increase margins further or sell more product to increase earnings in the long run. After the restructuring is over, there's going to be difficulty increasing those margins. So most of future earnings growth will have to come from increasing sales. It would be hard to take sales away from their competition. So the industry's market most grow. The industry's market can't grow that much in developed countries. It would have to be mostly in developing nations. How much market demand can they gain there and how fast? That's the question. I can see why Buffett bought Fruit of the Loom (in bankruptcy) since it could throw off consistent earnings. Slow and steady can be nice, but will investors in Hane's beat the market in general in the future?