Hanesbrands Inc. (HBI), V.F. Corporation (VFC): Socks, Underwear, or Print: Apparel Companies with a Future

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.

Closing

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.

The article Socks, Underwear, or Print: Apparel Companies with a Future originally appeared on Fool.com.

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