Gildan Activewear Inc
Gildan Activewear Inc
IBD Stock Analysis
- Closing in on 38.24 flat-base buy point
- Offers early entry from 50-day line rebound and clearing short-term resistance
- Relative strength line already hits new high on weekly chart
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:35PM EDT on
Gildan stock is the IBD Stock Of The Day as the consumer apparel maker offers an early buy point after finding bullish support at a key level.
Montreal-based Gildan Activewear (GIL) specializes in selling its T-shirts, underwear, socks and hosiery in bulk to printers, brands or companies, which may then choose to embellish the clothing as they see fit. It’s growing online and benefiting as consumers spend more on clothes. Meanwhile, growth is rebounding after a tough couple years.
Gildan owns about 25 apparel manufacturing factories around the world. The Canadian company spins its own yarn, assembles the final garments and distributes its products.
In 2017, Gildan acquired the American Apparel brand. The company traces its origins to a children’s apparel brand that began in Montreal in 1946.
Gildan supplies Amazon.com (AMZN) for its fast-growing private clothing labels, including Goodthreads. It also supplies private labels at Target (TGT) and Walmart (WMT). Private brands offer competition to Gildan’s own brands. But the shift to private-label offerings at retail giants also boosts revenue, Gildan says.
Gildan Stock Technical Analysis
Shares climbed 3.8% to 37.37 on the stock market today, moving in heavy volume. Gildan stock offers an early entry after topping resistance just below 37, as well as rebounding bullishly from the 50-day and 10-week lines.
GIL stock is just below an official 38.24 buy point in a flat base going back to early May, according to MarketSmith chart analysis. Gildan stock has quadrupled from its March 2020 lows but remains below its July 2019 all-time high.
The relative strength line for Gildan stock made a new high Tuesday. It is rallying within a longer-term downtrend. A rising RS line means that a stock is outperforming the S&P 500 index. It is the blue line in the chart shown.
On June 17, Gildan launched a new website, which puts all its printwear brands, including American Apparel, under one roof.
Gildan stock’s IBD Composite Rating, which combines key fundamental and technical metrics in a single easy-to-use score, is a solid 87 out of 99.
It holds an equally sound Relative Strength Rating of 88 out of a possible 99. That means it has outperformed 88% of all stocks in the past year.
Big investors have been moving money into Gildan stock, as seen in a superior Accumulation/Distribution Rating of A. In fact, Gildan shows three quarters of rising fund ownership.
The apparel manufacturing industry group ranks a dull No. 79 out of 197 groups, according to IBD Stock Checkup. But Gildan stock is ranked fourth within this group, with Figs at No. 1.
Gildan Earnings and Fundamentals
In 2021, Wall Street sees Gildan earnings per share of $2.35 vs. last year’s loss of 23 cents, according to FactSet. Revenue is seen growing 33% to $3.29 billion after crumbling nearly 34%in 2020. In 2019, Gildan earnings fell 10% while sales fell 3%.
The everyday apparel maker sports so-so EPS Rating of 59 out of 99.
Gildan earnings easily beat Wall Street estimates the past three quarters in a row, according to FactSet. EPS shot up 700% in Q1 with revenue up 28%, helped by easy comparisons. In fiscal 2020, Gildan earnings more than halved to 8 cents per share.
The coronavirus pandemic led to a sharp reduction in sales for both Gildan’s imprintables and retail channels starting in the second half of March 2020. It also temporarily shut down global factories.
Gildan’s recovery began in the latter half of Q2 2020 but took a hit again in Q4 2020 from hurricane disruptions to manufacturing. The company reported a strong start to 2021 on the back of its Back to Basic strategy. Gildan earnings came in significantly higher than both Q1 2020 and Q1 2019.
Between 2014 and 2019, prior to the pandemic, Gildan grew EPS 8% annually and sales 4% annually, while generating a cumulative $1.9 billion in free cash flow.
GIL Stock: Back To Basics
The Back To Basics strategy focuses on optimizing costs and simplifying the product portfolio. Gildan launched the strategy in 2017, consolidating business units and rationalizing less productive SKUs. At the same time, it’s introducing new products in growth markets.
In Q1, results benefited from stimulus check and a “$50 million restock impact” as distributors rushed to restock. Those are likely one-off benefits and may not continue.
Six analysts on Wall Street rate Gildan stock a buy, one has a hold and none has a sell, TipRanks says.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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