Hanesbrands Inc. HBI is gaining from robust growth efforts, which have been boosting investors’ optimism. Notably, shares of the company have surged 87.8% in the past three months compared with the industry’s growth of 39.4%. Also, the stock has comfortably outperformed the Zacks Consumer Discretionary sector’s rise of 20.1% in the same time frame.
Moreover, analysts look optimistic regarding the stock’s performance. Evidently, the Zacks Consensus Estimate for 2020 earnings has improved significantly to $1.47 per share in the past 30 days.
Let’s discuss the factors that are likely to keep driving the company’s growth.
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Protective Gear Business: A Key Driver
In an attempt to stay afloat amid the coronavirus pandemic, Hanesbrands developed a product line of personal protective garments. The newly-floated business resonates well with the present environment, commercial and consumer demand. Notably, the company has sold about $752 million of personal-protection garments worldwide during the second quarter of 2020, which is well ahead of expectations. As part of the protective garment sales in the second quarter, it delivered more than 450 million cloth face coverings and above 20 million medical gowns to the U.S.government.
Moreover, the company is selling face masks to customers globally under its brand names, including Hanes, Champion, Bonds and Dim. Going ahead, Hanesbrands expects to sell more than $150 million of protective garments in the second half of 2020, mostly in the third quarter. Clearly, the newly-floated protective garments business signifies an ongoing growth opportunity.
Strength in E-commerce Business
As consumers are increasingly resorting to online shopping, Hanesbrands continues to focus on developing its online sales. In second-quarter 2020, the company registered global online sales growth of more than 70% via the e-commerce websites, retailer websites, large internet pure-plays and business-to-business customers on a rebased year-over-year comparison. Hanesbrands, which is global partner with Amazon AMZN, is focused on making incremental investments in its online business to keep pace with consumers’ evolving shopping patterns.
Project Booster Bodes Well
Hanesbrands launched a multi-year program in first-quarter 2017 to drive investment for growth, minimize costs as well as increase cash flow. This program, which is well-positioned for the next five years, aims to boost the company’s Sell More, Spend Less, Generate Cash strategy for additional gains, mainly from the global commercial and supply chain scale through acquisitions. Furthermore, the Project Booster cost savings along with other cash flow drivers like synergies from buyouts and diversified revenues bode well.
We believe that robust cost savings along with the aforementioned upsides are likely to help this Zacks Rank #1 (Strong Buy) stock to stay in investors’ good books.
Top 2 Consumer Discretionary Picks
Crocs CROX which sports a Zacks Rank #1, has a long-term earnings growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Activision Blizzard ATVI, carrying a Zacks Rank #2 (Buy), has long-term earnings growth rate of 17.3%.
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