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What's in the Offing for Hanesbrands' (HBI) Q2 Earnings?

Zacks Equity Research

Hanesbrands Inc. HBI is scheduled to release second-quarter 2019 results on Aug 1. This provider of apparel essentials has a mixed earnings surprise record in the trailing four quarters. In the last reported quarter, the company’s bottom line surpassed estimates by an average of 8%. Let’s see how things are placed ahead of the upcoming quarterly results.

What to Expect?

The Zacks Consensus Estimate has declined by a penny in the past 30 days and is currently stable at 44 cents. The projected figure indicates nearly 2.2% decline from the year-ago quarter’s reported figure. Nonetheless, the consensus mark for revenues is pegged at $1,752 million, which suggests a rise of 2.2% from the year-ago quarter’s reported figure.

Factors Likely to Impact in Q2

Hanesbrands has been cherishing consistent growth in organic sales, which is likely to continue in the quarter to be reported. Notably, the metric has been rising year over year for quite some time, backed by higher sales from Activewear and International units. Such upside can be attributed to strength in Champion brand. Notably, management’s focus on investments and innovations are likely drive results in the International segment.

Markedly, the Zacks Consensus Estimate for net sales in the International and Activewear segments is currently pegged at $557 million and $454 million, which suggests an increase from $546 million and $406 million reported in the year-ago quarter, respectively.

Apart from these, the company undertakes strategic acquisitions to maintain a strong portfolio. In this context, the buyout of Bras N Things has been yielding results as witnessed in the first quarter.  This combined with sturdy progress in the digital arena are likely to continue supporting the top line in the upcoming quarter.

Hurdles in the Path

Raw-material inflation has been a hurdle for the company and is a threat for the bottom line in the quarter to be reported. Also, high operating costs are concerns. Moreover, the impact of any adverse currency fluctuation on quarterly results cannot be counted out completely. The same factor weighed upon the company’s gross margin in the first quarter.

What the Zacks Model Unveils

Our proven model shows that Hanesbrands is not likely to beat estimates in the to-be-reported quarter. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can see the complete list of today’s Zacks #1 Rank stocks here.

Although Hanesbrands carries a Zacks Rank #3, its Earnings ESP of -0.90% makes surprise prediction difficult. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider as our model shows that they have the right combination of elements to beat estimates.

Under Armour UAA has an Earnings ESP of +81.61% and a Zacks Rank #1.

lululemon athletica LULU has an Earnings ESP of +0.97% and a Zacks Rank #2.

Rent-A-Center RCII has an Earnings ESP of +3.88% and a Zacks Rank #2.

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Hanesbrands Inc. (HBI) : Free Stock Analysis Report
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