On the rise
After its second-quarter results blew past the Street’s forecast, shares of Gildan Activewear Inc. were higher on Thursday.
Before the bell, the Montreal-based clothing manufacturer reported adjusted earnings per share of 68 US cents, topping analysts’ expectations of 52 US cents.
In a research note, Desjardins Securities’ Chris Li said: “The outperformance was broad-based (stronger sales, gross margins and SG&A leverage). The highlight is on adjusted EBIT margin, which came in at 19.9 per cent, well above our 16.3-per-cent estimate, and more importantly, higher than management’s target of 18.0 per cent. This should increase investors’ confidence in the longer-term margin outlook as sales recover to pre-pandemic levels. As a result of the strong recovery to date and the progress of GIL’s ‘Back to Basics’ strategy, and with the prospects for continued strong FCF generation, the company reinstated its share repurchase program (up to 5 per cent of shares effective August 9, 2021), supported by a very strong balance sheet with net debt/EBITDA of only 0.6 times, below its target of 1–2 times.”