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Are Investors Undervaluing HanesBrands (HBI) Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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.

HanesBrands (HBI) is a stock many investors are watching right now. HBI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.43, which compares to its industry's average of 18.30. Over the last 12 months, HBI's Forward P/E has been as high as 11.96 and as low as 6.33, with a median of 9.40.

Another valuation metric that we should highlight is HBI's P/B ratio of 5.24. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 6.14. Over the past 12 months, HBI's P/B has been as high as 10.46 and as low as 4.65, with a median of 6.44.

Finally, our model also underscores that HBI has a P/CF ratio of 7.91. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. HBI's P/CF compares to its industry's average P/CF of 24.23. Within the past 12 months, HBI's P/CF has been as high as 45.36 and as low as 6.58, with a median of 9.77.

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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