U.S. Markets closed

Factors Setting the Tone for Hanesbrands (HBI) Q3 Earnings

Zacks Equity Research

Hanesbrands Inc. HBI is scheduled to release third-quarter 2019 results on Oct 31, before market open. Earnings of this provider of apparel essentials have surpassed the Zacks Consensus Estimate in three out of the trailing four quarters, the average being 3.1%. In the last reported quarter, the company delivered a positive earnings surprise of 2.3%. Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

What to Expect?

The Zacks Consensus Estimate for third-quarter 2019 earnings has been stable in the past 30 days at 54 cents, which suggests a decline of 1.8% from the year-ago quarter’s reported figure. The consensus mark for revenues is at $1,847 million, which indicates a rise 0.6% from the prior-year quarter’s figure.

Hanesbrands Inc. Price, Consensus and EPS Surprise


Hanesbrands Inc. Price, Consensus and EPS Surprise

Hanesbrands Inc. price-consensus-eps-surprise-chart | Hanesbrands Inc. Quote


Factors Likely to Impact in Q3

Strong brands and organic sales growth are likely to have benefited Hanesbrands’ top line in the third quarter. Markedly, the company’s organic sales have been gaining from broad-based growth across most business channels and regions. In this context, consistent growth in the Activewear and International units has been a vital upside. Growth in these segments along with innovations are expected to have boosted organic sales in the to-be-reported quarter.

Speaking about brands, the Champion banner is likely to have contributed to revenues during the third quarter. The brand has been popular at a global scale. Additionally, acquisitions of Bras N Things, Champion Europe and Hanes Australasia are expected to have had a positive impact on Hanesbrands’ top line.

However, sluggishness in the innerwear unit is likely to have affected the company’s third-quarter performance. In the last earnings call, management had guided a sales decline of 2% for the U.S. Innerwear business in the third quarter.

Moreover, rising input costs are likely to have exerted pressure on the company’s third-quarter bottom line. The company has been reeling under higher logistics and commodity costs. Moreover, adverse currency fluctuations might have been a threat.

Although the company has been on track with savings initiatives, such as Project Booster, it is yet to be seen how these efforts have pared input costs-related challenges when third-quarter numbers are reported.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Hanesbrands this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Hanesbrands has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks Poised to Beat Estimates

Here are some companies that you may want to consider, as our model shows that these have the right combination to post an earnings beat:

lululemon athletica LULU has an Earnings ESP of +4.14% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Under Armour UAA has an Earnings ESP of +9.37% and a Zacks Rank #2.

Ralph Lauren RL has an Earnings ESP of +0.67% and a Zacks Rank #3.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
Under Armour, Inc. (UAA) : Free Stock Analysis Report
Ralph Lauren Corporation (RL) : Free Stock Analysis Report
Hanesbrands Inc. (HBI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research