Gildan Activewear (NYSE: GIL) and Hanesbrands (NYSE:HBI) are both mid-cap cyclical consumer goods & services companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, institutional ownership, earnings, profitability and dividends.
Volatility and Risk
Gildan Activewear has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Hanesbrands has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500.
This is a summary of current recommendations and price targets for Gildan Activewear and Hanesbrands, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Gildan Activewear presently has a consensus target price of $33.86, indicating a potential upside of 4.24%. Hanesbrands has a consensus target price of $25.40, indicating a potential upside of 16.89%. Given Hanesbrands’ stronger consensus rating and higher probable upside, analysts plainly believe Hanesbrands is more favorable than Gildan Activewear.
This table compares Gildan Activewear and Hanesbrands’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Gildan Activewear pays an annual dividend of $0.37 per share and has a dividend yield of 1.1%. Hanesbrands pays an annual dividend of $0.60 per share and has a dividend yield of 2.8%. Gildan Activewear pays out 22.0% of its earnings in the form of a dividend. Hanesbrands pays out 37.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Gildan Activewear has raised its dividend for 5 consecutive years and Hanesbrands has raised its dividend for 4 consecutive years.
Earnings & Valuation
This table compares Gildan Activewear and Hanesbrands’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Gildan Activewear||$2.59 billion||2.76||$346.63 million||$1.68||19.33|
|Hanesbrands||$6.03 billion||1.31||$539.38 million||$1.62||13.41|
Hanesbrands has higher revenue and earnings than Gildan Activewear. Hanesbrands is trading at a lower price-to-earnings ratio than Gildan Activewear, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
72.9% of Gildan Activewear shares are held by institutional investors. Comparatively, 96.8% of Hanesbrands shares are held by institutional investors. 1.1% of Hanesbrands shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Hanesbrands beats Gildan Activewear on 9 of the 17 factors compared between the two stocks.
About Gildan Activewear
Gildan Activewear Inc. is a manufacturer and marketer of branded basic family apparel, including T-shirts, fleece, sport shirts, underwear, socks, hosiery and shapewear. The Company operates through two segments: Printwear and Branded Apparel. The Printwear segment designs, manufactures, sources, markets, and distributes undecorated activewear products. The Branded Apparel segment designs, manufactures, sources, markets, and distributes branded family apparel, which includes athletic, casual and dress socks, underwear, activewear, sheer hosiery, legwear, and shapewear products, which are sold to retailers in the United States and Canada. The Company sells its products under various brands, including the Gildan, Gold Toe, Anvil, Comfort Colors, American Apparel, Alstyle, Secret, Silks, Kushyfoot, Secret Silky, Therapy Plus, Peds, and MediPeds brands. The Company distributes its products in printwear markets in the United States, Canada, Mexico, Europe, Asia-Pacific and Latin America.
Hanesbrands Inc. is a marketer of basic innerwear and activewear apparel in the Americas, Europe, Australia and Asia/Pacific under apparel brands, such as Hanes, Champion, Maidenform, DIM, Bali, Playtex, Bonds, JMS/Just My Size, Nur Die/Nur Der, L’eggs, Lovable, Wonderbra, Flexees, Gear for Sports and Berlei. The Company operates through four segments: Innerwear, Activewear, Direct to Consumer and International. The Innerwear segment focuses on core apparel products, such as intimate apparel, men’s underwear, women’s panties, children’s underwear, socks and hosiery. The Company operates in the activewear market through its Champion, Hanes and JMS/Just My Size brands. The Direct to Consumer segment operations include its domestic Company-operated outlet stores and Website operations that sell its branded products directly to consumers in the United States. The International segment includes products that primarily span across the innerwear and activewear segments.
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