Narrow-Moat Hanesbrands’ Uninspiring Q2 Results and Outlook Already Reflected in Valuation

Inflation, a slowdown in sales, the stronger U.S. dollar, and even a ransomware attack led to disappointing second-quarter results and a lowered 2022 outlook for Hanesbrands. Specifically, the company guided to sales of $6.45 billion-$6.55 billion and adjusted EPS of $1.11-$1.23 on for the year, down from the $7 billion-$7.15 billion and $1.64-$1.81 that it projected just three months ago. We expect to cut our $26 per share fair value estimate by close to 10% on this gloomy outlook but continue to view Hanes, offering a dividend yield above 5%, as undervalued at a P/E of about 10 on depressed earnings.