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At US$14.85, Is Hanesbrands Inc. (NYSE:HBI) Worth Looking At Closely?

Simply Wall St

Hanesbrands Inc. (NYSE:HBI), which is in the luxury business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$16.31 at one point, and dropping to the lows of US$14.36. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Hanesbrands's current trading price of US$14.85 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Hanesbrands’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Hanesbrands

What is Hanesbrands worth?

Good news, investors! Hanesbrands is still a bargain right now. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.29x is currently well-below the industry average of 19.11x, meaning that it is trading at a cheaper price relative to its peers. However, given that Hanesbrands’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Hanesbrands look like?

NYSE:HBI Past and Future Earnings, January 2nd 2020
NYSE:HBI Past and Future Earnings, January 2nd 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Hanesbrands’s earnings over the next few years are expected to increase by 22%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since HBI is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on HBI for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy HBI. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Hanesbrands. You can find everything you need to know about Hanesbrands in the latest infographic research report. If you are no longer interested in Hanesbrands, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.