At US$4.90, Is It Time To Put Hanesbrands Inc. (NYSE:HBI) On Your Watch List?

Hanesbrands Inc. (NYSE:HBI), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$8.71 at one point, and dropping to the lows of US$4.90. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Hanesbrands' current trading price of US$4.90 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Hanesbrands’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Hanesbrands

What's The Opportunity In Hanesbrands?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16.68% above my intrinsic value, which means if you buy Hanesbrands today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $4.20, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Hanesbrands’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Hanesbrands generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Hanesbrands, it is expected to deliver a relatively unexciting top-line growth of 4.8% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? HBI’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on HBI, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Hanesbrands at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Hanesbrands.

If you are no longer interested in Hanesbrands, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.