What Is Driving Our $36 Price Estimate For Gildan Activewear Inc.?

Gildan Activewear Inc (NYSE: GIL) engages in the manufacture of family apparel, including T-shirts, fleece, sport shirts, socks, underwear, hosiery, and shape wear. During the previous annual earnings, the company’s revenue grew by 6.4% at $2.7 Billion y-o-y for the full year, over 2016’s $2.5 Billion, driven by a meaningful 10.4% organic growth across its Printwear segment sales, while Branded Apparel sales were slightly down from the prior year’s level. Sales growth in 2017 included an incremental sales contribution of approximately $133 million from the 2016 acquisitions of Alstyle and Peds and the American Apparel acquisition, which was completed on February 8, 2017. Additionally, the increase in sales over the prior year reflected higher net selling prices, double-digit organic unit sales volume growth in fashion and performance basics, favorable Printwear product mix, higher underwear sales volumes, and increased shipments in international markets.

For 2018, The company is more then ever committed to deliver innovation that is truly differentiated, generate higher returns via continued cost and productivity initiatives, and ultimately generate strong returns for their shareholders.

Keeping in mind the management’s focus on growth initiatives, we anticipate the company to post progressive results in the future. Our price estimate of $36 is dependent on a FY18 sales forecast of $2.9 bn, up 5.7% from $2.7 bn last fiscal. We also expect net income margin to be ~14%, a Price-to-Earnings multiple of 19.3 and an average share count of  219 mn, giving a share price estimate of $36, roughly 20% above its current market price.

 

 

The P/E multiple is also forecast taking into account the historical data and its likely trend. Detailed steps to arrive at our price estimate are outlined in our interactive dashboard Is the Market Pricing Gildan Activewear Inc. Fairly? You can modify our assumptions to arrive at your own price estimate for the company.