HanesBrands Turns In a Comfy Fourth Quarter

Much of the last year has seen a market increasingly devoted to comfortable clothes. The stuff typically worn “around the house” has, largely by necessity, become the stuff that we wear to work, on dates, and a range of other options because all of those occasions are now done mainly “around the house”. That means purveyors of comfortable clothes are seeing something of a renaissance, and that's the case with HanesBrands (NYSE:HBI), whose lineup of comfy is driving some serious gains in revenue and earnings.

One Very Comfortable Earnings Report

The earnings numbers should make any investor breathe a sigh of relief before sitting back and relaxing. The company turned in earnings of $0.38 per share against estimates of $0.29 per share, which is a solid beat percentage-wise. Meanwhile, net sales for the company turned out to be $1.8 billion, which compares nicely with the figures taken from the same time the preceding year, coming in at $1.75 billion.

Full-year figures provided some solid numbers as well; net sales for the year turned out to be $6.7 billion, reports note, with $959 million worth of personal protective equipment (PPE) sold. The fourth quarter was home to $28 million worth of revenue from PPE sales. Reports suggest some rather extensive write-downs took place, though, so the fullest numbers didn't turn out to be quite such a rosy picture.

The company's clear strong point was the Champion brand, which turned in an 11% increased for the quarter, alongside the company's “Innerwear” operations, which landed 13% gains this quarter. This likely explains why Champion is a major part of the company's Full Potential initiative, which began back in the fourth quarter. Growing the Champion brand worldwide is a major part of that initiative, as is growth in the Innerwear segment, a streamlined global portfolio of operations, and of course, further growth and development of e-commerce operations.

Analysts are Getting Comfy in HanesBrands, Too

While comfy was the order of the day in Hanes, and in its earnings report, the consensus estimate from analysts has long since gotten comfy in Hanes shares, based on our latest research. The company has enjoyed a consensus rating of “buy” for the last six months, though the ratios comprising that consensus have shifted somewhat in the meantime.

Six months ago, the company had one “sell” rating, four “hold”, five “buy” and one “strong buy” rating to its credit. Three months ago, that swung a little farther toward bullish with one “sell”, three “hold”, five “buy” and one “strong buy.” A month ago, however, the numbers wobbled back toward bearishness with one “sell”, four “hold”, four “buy” and one “strong buy” rating, which is the exact ratio of where we are today.

The price target, meanwhile, has fluctuated quite a bit in that time frame. Six months ago, it sat at $14.05. That dropped a bit to $13.75 three months ago and then to $13.65 a month ago. Now, it's jumped back to $13.75 today, which actually represents downside potential for the first time in the last six months.

A Truly Comfy Stock

Granted, a lot of Hanes' recent gains come from the fact that, for the foreseeable future, we'll be able to live a lot of our lives in sweatpants. Going out is still pretty heavily regulated in a lot of places, though the rise of therapeutics and vaccines is helping to pave the way back to some kind of normalcy therein. Still, with many major corporations continuing to endorse remote work, the idea of working from home in sweatpants is likely to carry on for the foreseeable future.

Additionally, it's important to note here how focused on growth Hanes actually seems to be. The Full Potential plan ticks a lot of the right boxes here, and while it may not go off quite as hoped—very few plans actually survive initial contact with the market—any move in that direction is likely to do well for the company as a whole. While the Innerwear concept isn't doing well in Europe—at last report Hanes is looking into strategic alternatives on that front—it's doing well in the US, and that's a vital market by any stretch.

Hanes has a lot of solid potential to keep itself going smoothly in the field, and with a dividend that's been holding steady since early 2017, that makes it a pretty attractive investment for income investors. Looking for bang-up growth or huge price swings from Hanes is pretty unlikely, but for those looking for a stable investment that should return dividends for some time to come, it's certainly one to consider getting comfortable with for a long while