HanesBrands Inc (HBI: NYE) shook things up in June 2024 by announcing the sale of its Champion brand to Authentic Brands Group for $1.2 billion, with the potential to reach $1.5 billion if certain performance goals are met.
Stock Target Advisor’s Analysis on HanesBrands:
According to Stock Target Advisor, HanesBrands’ stock rating slants towards a ‘Sell’ with a target price of $5 and a projected price change of -3.47% in the next 12 months. The average analyst target price hovers around $4.86, indicating a ‘Hold’ rating.
HanesBrands showcases positive signals such as being underpriced on a cashflow basis, positive cash flow, free cash flow and superior total returns and dividend growth. However, a careful review of other financial performance signals shows less promising facts: poor capital utilization, return on assets, an overpriced status compared to book value and earnings, below median dividend returns, poor risk-adjusted returns, slow revenue, and earnings growth.
How Does the Champion Brand Sale Impact HBI’s Financial Health?
Proceeds from the Champion brand’s sale will service HanesBrands’ debt, fostering healthier fiscal foundations. Yet, underlying uncertainties stem from the potential impact on sales figures due to the loss of a major revenue generator. The future success of HanesBrands hangs heavily on the growth of the remaining brands and expansion into new markets.
Consequently, investors are urged to monitor the company’s performance closely, especially with split analyst opinions that equally consider profitability boost and revenue stream loss.
Bottom Line:
HanesBrands’ recent major business decision to sell the Champion brand leaves them poised on a knife’s edge. Consolidating debt and potentially increasing profitability are enticing prospects while the loss of a significant revenue stream presents a formidable challenge.
