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Why Hanesbrands Stock Jumped Today

By Jeremy Bowman – Updated Apr 16, 2019 at 5:26PM

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Shares of the apparel company gained on an impressive earnings report.

What happened

Shares of Hanesbrands (HBI -3.47%) were surging today after the maker of apparel basics reported strong fourth-quarter results, topping analyst estimates across the board. As a result, the stock was up 19.2% as of 2:10 p.m. EST.

So what  

Hanesbrands, which also owns brands like Champion, Playtex, and Maidenform, said revenue was up 7.5% in the quarter to $1.77 billion, easily beating expectations at $1.71 billion, as constant-currency organic sales increased 6%.

A man wearing a Champion sweatshirt.

Image source: Hanesbrands.

Champion, which has been experiencing a resurgence lately, helped drive overall performance as the brand posted strong double-digit sales growth and helped U.S. activewear sales increase 13%. The international segment also outperformed, with sales increasing 12% and operating income rising 28%. On an annual run-rate basis, international is now the company's biggest business.

While innerwear sales were flat, activewear and international boosted adjusted operating profit up 10%. Adjusted earnings per share, however, fell from $0.52 to $0.48, ahead of expectations at $0.46, but that was due to a higher tax rate from a year ago. Adjusting for that, EPS was up 12%. The company also reduced its debt load by $403 million to $3.8 billion.

CEO Gerald Evans summed up the performance, saying, "We had a strong fourth quarter with organic sales growth, margin expansion, double-digit operating profit growth, strong cash generation, and significant debt and leverage reduction."

Check out the latest Hanesbrands earnings call transcript.  

Now what 

Looking ahead, Hanesbrands sees modest growth in 2019, with full-year revenue expected to rise about 2% to $6.885 to $6.985 billion. On the bottom line, it projected adjusted EPS of $1.72 to $1.80, up from $1.71 in 2018. Analysts were expecting $6.79 billion in revenue and $1.80 in earnings per share for the year.

Hanesbrands is known as a slow-growth, defensive, dividend-paying stock, so 7% revenue growth is unusually strong for the company. If the apparel maker continues to see solid growth from Champion and the international segment, I wouldn't be surprised to see it top its 2019 forecast.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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