Is Hanesbrands Fairly Priced After Gildan’s $6 Per Share Offer?

If you are trying to figure out what to do with Hanesbrands stock right now, you are definitely not alone. The conversation has heated up again, spurred by news that Gildan Activewear is reportedly eyeing a takeover at about $6 per share. This sort of bid inevitably shines a spotlight on Hanesbrands’ fundamentals, forcing investors to re-evaluate both the risks and the upside, especially since the stock closed most recently at $6.90.

In the last week, Hanesbrands saw a tidy 4.7% gain, extending to 12.4% over the past month. That's a nice bump, coming after a pretty rough ride. Year-to-date returns are still negative at -14.1%, and the five-year number sits at a sobering -55.5%. Yet, that fresh interest from Gildan and hints of underlying value might explain why shares have recently rallied, even with long-term performance still deep in the red. The market seems to be recalibrating its view of Hanesbrands’ potential, with takeover chatter suggesting value others might be missing.

So, how does Hanesbrands actually stack up by the numbers? Using a simple value scoring system centered on six key valuation checks, Hanesbrands scores a 4, meaning it appears undervalued in four out of six areas. That is the kind of score that grabs attention for value-focused investors.

Of course, there is more than one way to evaluate whether Hanesbrands is really a bargain. Next, we will break down each valuation method, but keep reading because there is a better, smarter way to approach valuation that every investor should know before making a final call.

Hanesbrands delivered -2.7% returns over the last year. See how this stacks up to the rest of the Luxury industry.

Approach 1: Hanesbrands Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and discounting them back to today, essentially asking what those future dollars are worth now. For Hanesbrands, this approach uses two stages of estimating Free Cash Flow to Equity (FCFE).

Currently, Hanesbrands generated $35.88 million in free cash flow over the last twelve months. Analysts project that by the end of 2026, annual free cash flow will rise sharply to $290.7 million, with further years extrapolated based on reasonable industry trends. Even looking ten years out, forecasts suggest Hanesbrands could maintain annual free cash flow in the range of $250 million to $270 million, with discounted values reflecting the declining impact of each future year.

When all these projected cash flows are added and adjusted for time, the DCF model calculates Hanesbrands’ current intrinsic value at $7.28 per share. With the stock currently trading at $6.90, this represents a 5.3% discount. It implies the market's pricing is close to the company's estimated long-term worth using this method.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Hanesbrands.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Hanesbrands's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Hanesbrands Price vs Earnings

For profitable companies like Hanesbrands, the Price-to-Earnings (PE) ratio remains one of the go-to measures of value because it directly compares a company’s current share price with its earnings. PE is especially meaningful when the company is generating consistent profits, providing a benchmark for how much investors are willing to pay for each dollar of earnings.

What makes a “normal” or “fair” PE ratio is not one-size-fits-all. Higher growth prospects and lower business risks typically justify higher PE multiples, while slow growth or more uncertainty push fair ratios down. That is why comparing PE ratios is not just about scanning a single number; it is about context.

Hanesbrands is currently trading at a PE ratio of 14.35x. For perspective, its industry average PE is 21.33x and the peer average is 16.62x. Hanesbrands looks cheaper on a basic comparison. However, Simply Wall St’s “Fair Ratio” goes a step further by considering the company’s specific growth outlook, profit margins, risk factors, competitive landscape, and even its market size. For Hanesbrands, this Fair Ratio is 18.10x.

Since the company’s actual PE ratio (14.35x) is reasonably close to the Fair Ratio (18.10x), the stock appears priced about right relative to its fundamentals, even after accounting for company-specific risks and opportunities. This deeper approach gives investors more confidence that the shares are not obviously undervalued or overvalued based on earnings multiples alone.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Hanesbrands Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is your investment story: it connects what you believe about Hanesbrands’ future, such as its revenue growth or profit margins, to a clear forecast and a specific fair value estimate, going far beyond just the raw numbers.

With Narratives, investors don’t simply rely on a single formula or analyst consensus. Instead, they bring their individual expectations and perspectives into the process, whether you see Hanesbrands as poised for international expansion and margin improvement, or facing ongoing challenges and market headwinds. This approach makes your thinking explicit: your story, your assumptions, your valuation.

Narratives on Simply Wall St’s Community page let you enter your own financial outlook or use those shared by millions of other investors. You can instantly see how your story translates into a fair value and compare it to the current price, making it easy to decide if and when to buy or sell. Plus, Narratives are automatically updated whenever new news or earnings reports are released, so your fair value always reflects the latest data.

For example, right now the most optimistic Hanesbrands Narrative values the stock at $10.30 per share, while the most cautious calls for just $1.00. This illustrates how Narratives capture very different stories and fair values, all side by side.

Do you think there's more to the story for Hanesbrands? Create your own Narrative to let the Community know!

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.

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