The Zacks Analyst Blog Highlights: Hanesbrands, Limited Brands, Maidenform Brands, Progressive, Allstate Corporation

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Jul 15, 2011, 10:16 ET

CHICAGO, July 15, 2011 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Hanesbrands Inc. (NYSE: HBI), Limited Brands Inc. (NYSE: LTD), Maidenform Brands Inc. (NYSE: MFB), Progressive Corp. (NYSE: PGR) and Allstate Corporation (NYSE: ALL).

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Here are highlights from Thursday's Analyst Blog:

Earnings Preview: Hanesbrands Inc.

Hanesbrands Inc. (NYSE: HBI) is scheduled to report its second-quarter 2011 financial results on Monday, July 18, 2011.

Currently, Zacks Consensus Estimates call for 86 cents per share on sales of around $1,218 million.

First Quarter 2011: a Synopsis

Hanesbrands, which faces stiff competition from Limited Brands Inc. (NYSE: LTD) and Maidenform Brands Inc. (NYSE: MFB) reported first quarter earnings of 49 cents per share, which was 32% higher than 37 cents in the previous year.

Earnings surpassed the Zacks Consensus Estimate of 33 cents by 48.5%. Profits were primarily impacted by acquisitions, organic growth and operational efficiency.

Total revenue for the quarter climbed 11.7% to $1,306.41 million from $927.84 million in the year-ago period. The growth in net sales was driven by strong performance of the acquired 'Gear For Sports' business, organic Outerwear segment growth and International growth.

Management Guided

Following strong results in the quarter, the company raised its full-year 2011 diluted EPS guidance to a range of $2.70 to $2.90, ten cents higher than the previous guidance of $2.60 to $2.80.

Hanesbrands expects net sales to remain in the range of $4.9 billion to $5 billion, with the low end of the range having increased from $4.85 billion.

Second-Quarter 2011 Zacks Consensus

Analysts covered by Zacks expect Hanesbrands to post second-quarter 2011 earnings of 86 cents a share. The current Zacks Consensus is 28.35% higher than the year ago period and ranges within a low of 85 cents to a high of 88 cents.

The current estimate remained the same over last 60 days as no analyst revised estimates.

Our Recommendation

Hanesbrands is a leading player in the innerwear, casual wear and active wear markets in the U.S. Moreover, the company commands a portfolio of well-recognized flagship brands, including Hanes, Champion, Playtex and Bali, which provides a competitive advantage to the company and reinforces its well established position in the industry.

Hanesbrands is undertaking prudent steps to optimize inventory levels in accordance with sales trends, thereby improving margins and cash flow from operations

However, Hanesbrands' debt-ridden balance sheet and unfavorable foreign translations may weigh upon both the top and bottom lines.

Hanesbrands currently holds a short-term Zacks #4 Rank (Sell). On a long-term basis, we maintain a 'Neutral' rating.

Progressive Misses by a Penny

Progressive Corp.'s (NYSE: PGR) earnings per share for the second quarter of 2011 were 38 cents, lagging the Zacks Consensus Estimate by a penny.

Results, however, compared favorably with the year ago earnings of 32 cents. Net income increased 16% from the year-ago period to total $245 million.

The company recorded net premiums of $3.8 billion during the quarter under review, up 3% year over year. Net premiums earned were $3.7 billion, up 4% from the year-ago period.

Net realized gains on securities were $26 million during the second quarter of 2011, reversing the loss of $39.5 million in the year ago quarter. The combined ratio − the percentage of premiums paid out as claims and expenses − deteriorated 70 basis points over the prior-year period to 93.4% in the quarter under review.

Progressive reports its results every month. During June, policies in force remained healthy, with the Personal Auto segment increasing 5% year over year and 0.6% sequentially. Special Lines also showed an improvement of 5% year over year and 1.2% over the preceding month.

In Personal Auto, Direct Auto reported a growth of 8% year over year and 0.3% from the preceding month. Agency Auto was up 3% year over year and 0.2% from the last month. However, Progressive's Commercial Auto segment continued to drag results, reporting declines of 2% year over year.

Total expenses for the reported month increased 7.2% to $1.12 billion from $1.04 billion in June 2010. The major components contributing to the increase in total expenses were a 8.4% year over year increase in loss and loss adjustment expenses, a 2.3% increase in policy acquisition costs and a 6.4% increase in underwriting expenses.

Progressive reported a book value per share of $9.88, up from $9.44 as of June 30, 2010 but down from $9.97 as of May 31, 2011.

Return on equity on a trailing 12-month basis was 18.4%, down from 18.7% in June 2010 and 18.5% in May 2011. The debt-to-total-capital ratio was 23.6% as of June 2011, down from 25.7% as of June 2010 but up from 23.3% in the last month.

We maintain our Neutral recommendation on Progressive. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.

Headquartered in Mayfield Village, Ohio, The Progressive Corporation is one of the largest auto insurers in the country. It competes with Allstate Corporation (NYSE: ALL).

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