Hanesbrands’ Nice Start to 2022 Overshadowed by Near-Term Concerns; Shares Very Attractive

Although narrow-moat Hanesbrands outperformed our expectations in 2022’s first quarter, its shares fell by a mid-single-digit percentage as higher costs, freight delays, and unfavorable currency movement are expected to impact the second quarter and rest of the year. Despite this disappointment, Hanes believes underlying demand remains strong and expects to implement price increases on Champion in the third quarter. Moreover, as our 2022 forecast for $7.06 billion in sales and $1.76 in adjusted EPS remains within the firm’s ranges of $7 billion-$7.15 billion and $1.64-$1.81, respectively, we do not expect to make any material change to our $26 fair value estimate. Trading at a single-digit P/E and with a dividend yield above 4%, we view Hanes’ shares as very attractive.