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Is HanesBrands (HBI) a Great Value Stock Right Now?

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Zacks Equity Research
·2 min read
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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is HanesBrands (HBI). HBI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.97. This compares to its industry's average Forward P/E of 21.27. Over the last 12 months, HBI's Forward P/E has been as high as 13.90 and as low as 4.75, with a median of 8.92.

Investors should also recognize that HBI has a P/B ratio of 5.28. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. HBI's current P/B looks attractive when compared to its industry's average P/B of 6.43. Over the past year, HBI's P/B has been as high as 5.68 and as low as 2.36, with a median of 4.33.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. HBI has a P/S ratio of 0.7. This compares to its industry's average P/S of 0.73.

Value investors will likely look at more than just these metrics, but the above data helps show that HanesBrands is likely undervalued currently. And when considering the strength of its earnings outlook, HBI sticks out at as one of the market's strongest value stocks.


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Zacks Investment Research