Hanesbrands Inc. (HBI), Maidenform Brands, Inc. (MFB): An Unmentionables Merger That’s a Natural Fit

Ascena Retail Group Inc (NASDAQ:ASNA)’s stock is off its 52-week high of $22.18, mostly due to disappointing Q3 results on June 5 guiding lower on FY 2013 earnings to $1.10-$1.15 per share and reporting a drop in comps of 4% ex-e-commerce. EPS dropped from $0.34 to $0.26 from Q3 of 2012. The company is still digesting its acquisition of  full-figure stores Catherine’s and Lane Bryant, and integration costs weighed on the bottom line.

Ascena Retail Group Inc (NASDAQ:ASNA) has a trailing P/E of 24.70 and a forward P/E of 13.29 with a PEG of 1.13. It also owns Maurice’s (teens), dress barn, and Justice (tweens) for a total of 3,800 stores in the U.S., Puerto Rico, and Canada.

Analysts give Ascena Retail Group Inc (NASDAQ:ASNA) a 14.85% five year EPS growth rate and a median price target of $21.00 for 15% upside. Revenue for the first half of the year of $2.38 billion looks on track to meet or exceed  2012’s $3.72 billion for the full year.

Underwear that’s fun to wear

Hanesbrands Inc. (NYSE:HBI) has run big this year, but as its CEO Richard Noll put it, this merger is “a natural fit,” giving Hanesbrands  access to some much needed demographics. The plan to take its new purchase into Asia is also cheering.

I continue to like Limited Brands, Inc. (NYSE:LTD) for its PINK line and growing yield, but it’s entirely possible the stock treads water after flat June same-store sales. Back to school sales should be much better.

As for Ascena Retail Group Inc (NASDAQ:ASNA), its integration of Catherine’s and Lane Bryant should be well underway and the company should perform better in the latter half of the year.

The article An Unmentionables Merger That’s a Natural Fit originally appeared on Fool.com.

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