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Strategies & Market Trends : John Pitera's Market Laboratory

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John Pitera

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From: Jon Koplik	2/4/2017 11:26:56 AM
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(with my thoughts) / Barrons -- Hanesbrands [underwear maker] Plunges 16% ............. What I find incredibly annoying about this "dry" / boring ... write-up / commentary below sample : <<<<< we view visibility to underlying free cash generation key to valuation >>>>> is : It completely ignores the ( I think) obvious point that spending on underwear is another "classic" indicator of consumer well-being (just like purchases of mattresses). If you are short on money, you CAN postpone buying new underwear. Jon. ********************************************************************* February 3, 2017 6:29 P.M. ET The Biggest Loser: Hanesbrands Plunges 16% By Ben Levisohn Hanesbrands (HBI) tumbled to the bottom of the S&P 500 today after missing earnings forecasts and offering disappointing guidance. Hanesbrands dropped 16% to $18.98 today, while the S&P 500 rose 0.7% to 2,297.42. Stifel’s Jim Duffy and team explain what went wrong: "Structural changes in US consumer and retail trends weighed on 4Q and HBI fell short in 4Q. These trends are expected to continue in FY17 and guidance was more cautious than prevailing estimates. Given the leverage and dependence on acquisitions for growth, we view visibility to underlying free cash generation key to valuation and we are discouraged by both 2016 results which were well short of plan and the outlook for FY17 operating cash flow which is a step backwards from prior FY16 guidance. With a reduction in 2017 CFO estimates from $795mn to $690mn we are lowering our 12-month target price from $26 to $23." Hanesbrands’ market capitalization fell to $7.2 billion today from $8.6 billion yesterday. Hanesbrands was just one of many retail companies that got shellacked this week. Under Armour (UAA) tumbled 29% after missing earnings forecasts and cutting its guidance, while Deckers Outdoor (DECK) plunged 21% after its earnings missed the Street consensus, and Ralph Lauren (RL) plummeted 13% after its CEO stepped down. Copyright © 2017 Dow Jones & Company, Inc. .

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