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Will Gildan Activewear (GIL) See Earnings Growth in Q4?

Zacks Equity Research

Gildan Activewear, Inc. GIL is slated to report fourth-quarter 2018 results on Feb 21. The company outperformed the Zacks Consensus Estimate in two of the trailing four quarters, the average being 1.1%.

Which Way are Top & Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for earnings in the quarter under review stands at 44 cents, reflecting year-over-year growth of 41.9%. We also note that the Zacks Consensus Estimate has remained unchanged in the past 30 days.

The Zacks Consensus Estimate for revenues is pegged at $713 million, up approximately 9.1% from $653.7 million in the year-ago quarter. We note that total revenues of this retailer and manufacturer of apparel increased 5.3% in the last reported quarter.

Let’s see how things are shaping up prior to this announcement.

Gildan Activewear, Inc. Price and EPS Surprise



Gildan Activewear, Inc. Price and EPS Surprise | Gildan Activewear, Inc. Quote

Factors at Play

Solid performance in activewear category bodes well for Gildan Activewear. Buoyed by double-digit growth in this unit, the company witnessed top-line growth in a mid-single digit during the third quarter of 2018. Encouraged by this, management earlier projected sales growth in a mid-single digit for the fourth quarter of 2018. For the said period, double-digit growth in activewear along with fleece products, fashion basics, international growth and shipments under two new private label activewear programs are expected to serve as sales drivers.

We hope that these upsides will offset anticipated muted growth in hosiery category during the fourth quarter. Notably, the company witnessed soft performance in the hosiery category during the third quarter, owing to overall weak demand in the socks category. Sales in the last quarter were also negatively impacted by headwinds related to Hurricane Florence.

Further, management previously raised its fourth-quarter earnings guidance and anticipates the same to be 42-44 cents per share. This can be attributable to the expected robust growth in activewear category and lower SG&A costs. The company witnessed cost reductions in the third quarter, wherein SG&A expenses declined 7.1%, owing to organizational consolidation.

What the Zacks Model Unveils

Our proven model doesn’t show that Gildan Activewear is likely to beat estimates this quarter as the stock doesn’t have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Gildan Activewear currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%, which makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

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

Nike NKE has an Earnings ESP of +7.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Steven Madden SHOO has an Earnings ESP of +2.63% and a Zacks Rank #3.

Planet Fitness PLNT has an Earnings ESP of +12.50% and a Zacks Rank #3.

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