Critical Analysis: Delta Apparel (NYSE:DLA) and Hanesbrands (NYSE:HBI)

Delta Apparel (NYSE:DLA) and Hanesbrands (NYSE:HBI) are both small-cap consumer cyclical companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, risk, earnings, analyst recommendations and valuation.

Valuation and Earnings

This table compares Delta Apparel and Hanesbrands’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Delta Apparel	$415.35 million	0.04	-$33.21 million	($5.46)	-0.44
Hanesbrands	$5.64 billion	0.28	-$17.73 million	($0.05)	-90.98

Hanesbrands has higher revenue and earnings than Delta Apparel. Hanesbrands is trading at a lower price-to-earnings ratio than Delta Apparel, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Delta Apparel and Hanesbrands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Delta Apparel	-9.84%	-10.64%	-3.62%
Hanesbrands	-0.31%	5.84%	0.33%

Analyst Ratings

This is a breakdown of current ratings for Delta Apparel and Hanesbrands, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Delta Apparel	0	0	0	0	N/A
Hanesbrands	0	3	0	0	2.00

Hanesbrands has a consensus price target of $5.00, indicating a potential upside of 9.89%. Given Hanesbrands’ higher probable upside, analysts clearly believe Hanesbrands is more favorable than Delta Apparel.

Volatility and Risk

Delta Apparel has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500. Comparatively, Hanesbrands has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500.

Institutional and Insider Ownership

74.0% of Delta Apparel shares are owned by institutional investors. Comparatively, 80.3% of Hanesbrands shares are owned by institutional investors. 10.3% of Delta Apparel shares are owned by insiders. Comparatively, 0.5% of Hanesbrands shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Hanesbrands beats Delta Apparel on 10 of the 11 factors compared between the two stocks.

About Delta Apparel

Delta Apparel, Inc., through its subsidiaries, designs, manufactures, sources, and markets activewear and lifestyle apparel products in the United States, Honduras, El Salvador, Mexico, and internationally. The company operates through two segments, Delta Group and Salt Life Group. It offers on-demand digitally printed apparel products under the DTG2Go brand; silhouettes and fleece products; performance shirts that keep athletes dry under the Delta Dri line brand; ringspun garments; Delta Soft apparel products; and heritage, mid- and heavier-weight tee shirts under the Delta Pro Weight and Magnum Weight brand names, as well as polos, outerwear, headwear, bags, and other accessories under the Soffe brand. The company also distributes its products to various audience, which includes sporting goods and outdoor retailers, specialty and resort shops, farm and fleet stores, department stores, and mid-tier retailers, as well as through soffe.com website. In addition, it offers apparel, swimwear, board shorts, sunglasses, bags, and accessories under the Salt Life brand through surf shops, specialty stores, department stores, and outdoor retailers, as well as through its saltlife.com ecommerce site. The company was found in 1903 and is headquartered in Duluth, Georgia.

About Hanesbrands

Hanesbrands Inc., a consumer goods company, designs, manufactures, sources, and sells a range of range of innerwear apparels for men, women, and children in the Americas, Europe, the Asia pacific, and internationally. The company operates through three segments: Innerwear, Activewear, and International. It sells men's underwear, women's panties, children's underwear, and socks, as well as intimate apparel comprising bras and shapewear; home goods; activewear apparel comprising T-shirts, fleece, performance apparel, sport shirts, performance T-shirts and shorts, sports bras, teamwear, and thermals; and licensed logo apparel in collegiate bookstores and mass retail channels. The company licenses its Champion name for footwear and sports accessories. It offers its products under the Hanes, Champion, Maidenform, JMS/Just My Size, Bali, Polo Ralph Lauren, Playtex, Alternative, Gear for Sports, Comfortwash, Hanes Beefy-T, Bonds, Sheridan, Bras N Things, Wonderbra, Berlei, Zorba, Sol y Oro, Maidenform, Rinbros, Bellinda, and RITMO brand names through retailers, wholesalers, and third-party embellishers. Hanesbrands Inc. was founded in 1901 and is headquartered in Winston-Salem, North Carolina.