Revenue and cash flow have surprisingly stood at the same level during the last decade. On the other hand, the company’s net income has seen a 50% reduction in the same period. Its operating margin has not seen many changes, currently standing at 11% which is above the industry average. Its debt saw a reduction during the last five years, an improvement after rising to worrying levels.
Currently trading at 17.3 times its earnings, which is a 31% discount to the industry average, Hanesbrands Inc. (NYSE:HBI) offers a 0.38% yield and has a price tag very close to its 52-week high. As a result, the company’s stock is undervalued. It is recommended to HOLD until debt levels are further reduced. At this time, the risks associated with a high debt and adverse economic environment make the company a risky long-term investment.
I prefer V.F. Corporation (NYSE:VFC) to Gildan Activewear Inc (USA) (NYSE:GIL) or Hanesbrands Inc. (NYSE:HBI) because the company currently holds a stronger financial position while its market positioning allows it to compete with any one business. It also offers a higher yield and holds greater potential for making profits when expanding to the European and Asian market.
Vanina Egea has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Socks, Underwear, or Print: Apparel Companies with a Future originally appeared on Fool.com.
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