Gildan Activewear Beats Estimates but Has a Big Earnings Drop

Gildan Activewear (NYSE: GIL  ) reported earnings on May 3. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended April 1 (Q2), Gildan Activewear missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share contracted significantly.

Margins shrank across the board.

Revenue details
Gildan Activewear booked revenue of $482.6 million. The 10 analysts polled by S&P Capital IQ expected sales of $508.5 million on the same basis. GAAP reported sales were 26% higher than the prior-year quarter's $383.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.23. The 15 earnings estimates compiled by S&P Capital IQ anticipated $0.21 per share. GAAP EPS of $0.22 for Q2 were 56% lower than the prior-year quarter's $0.50 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 17.8%, 1,030 basis points worse than the prior-year quarter. Operating margin was 6.7%, 890 basis points worse than the prior-year quarter. Net margin was 5.6%, 1,040 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $581.7 million. On the bottom line, the average EPS estimate is $0.65.

Next year's average estimate for revenue is $1.93 billion. The average EPS estimate is $1.32.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 243 members out of 256 rating the stock outperform, and 13 members rating it underperform. Among 79 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 77 give Gildan Activewear a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Gildan Activewear is outperform, with an average price target of $27.39.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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