HanesBrands shares jumped Friday after the clothing company said it would begin issuing a quarterly dividend and forecast full-year earnings that were largely in line with market forecasts.
THE SPARK: The company held an investor day Thursday in Las Vegas where it said it plans to pay a quarterly dividend of 20 cents per share beginning in June. The quarterly dividend is the first for the company since its spinoff as an independent public company in 2006.
The Winston-Salem, N.C., company also reaffirmed its earnings forecast of $3.25 to $3.40 per share for the year on revenue of $4.6 billion. Analysts had forecast earnings of $3.35 per share on revenue of $4.62 billion.
THE BIG PICTURE: HanesBrands also said Thursday that it expects to earn 48 to 51 cents per share for its first quarter on revenue of $945 million. Analysts polled by FactSet, on average, were expecting the company to earn 32 cents per share on revenue of $974.9 million.
The company said the quarter was hampered by a sluggish retail environment, due to poor weather and delays in income tax returns to consumers, but it said its operating profit margin expanded for the period.
HanesBrands said the forecast is based on preliminary results and it will release its full first-quarter results on April 23.
THE ANALYSIS: Janney Capital Markets analyst Eric Tracy said he came away from the meeting believing that the company's revenue should hold up in 2013 despite some headwinds, and he expects the company will continue to expand its margins and lower its debt. Consequently, he expects the company's earnings will grow over the next two years.
While HanesBrands still faces the challenge of the impact of a still difficult economy on the low-end consumer, the analyst said he believes this is already factored into its guidance. He also sees a number of catalysts ahead to help the company, including a launch at Macy's in June and added shelf space at Walmart stores in the second quarter.
Tracy said he believes the issues in the first quarter are transitory and its full-year forecast could be conservative. The analyst maintained a "Buy" rating on the company's shares.
SHARE ACTION: Shares jumped 3 percent to $46.43 by midday on the news. Its stock is trading near the high end of its 52-week trading range of $24.64 to $47.08.
- Investment & Company Information