During the recent trading sessions stock of Hanesbrands Inc. (NYSE:HBI) was gathering the crowd in the stock market. Many analysts use price trends and patterns to predict future performance, and we can glean some important insights about HBI by examining the chart.
How has the stock performed recently?
Hanesbrands Inc. (NYSE:HBI) in the last month has decreased -7.83%. Shares are now up over the past year, outperforming the broad market by -100% and underperformed a peer group of similar companies by -107%. After the latest session, which saw the stock close at a price of $23.66, HBI sits below its 52-week high. Hanesbrands Inc. (NYSE:HBI) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that HBI may be headed in the future. Fortunately, there is way to use the speed and magnitude of these price changes to predict future performance, thanks to what are known as momentum indicators. As momentum slows, it might be a sign that a support or resistance level has been reached, and that a trend is about to reverse. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for HBI is 44.45%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 17.07%, tells a different story, and suggests that HBI currently trades in oversold territory.
What do the trading volumes reveal?
Analysts use volume trends to assess the level of conviction behind a stock’s price changes. When volumes suddenly increase above normal levels, it can be a sign that investors feel very strongly in one way or the other about the future direction of a stock, or may even have access to inside information. Hanesbrands Inc. (HBI) average trading volume of 4,296,715 during the past month is 12.17% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
HBI is currently undervalued by -13.96% relative to the average 1-year price target of $27.50 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.10, which implies that analysts are generally neutral in their outlook for HBI over the next year.
How risky is the stock?
In order to put HBI’s recent price performance into context, we need to get a sense of how the stock moves in relation to the overall market. Beta, which measures a stock’s price volatility relative to the market, provides the cleanest measure of systematic risk for a stock.
Hanesbrands Inc. (NYSE:HBI) has a beta of 0.77, compared to a beta of 1 for the market, which implies that the stock’s price movements are less extreme than the market as a whole. HBI therefore has a below average level of market risk. During the past couple of weeks, HBI average daily volatility was 27.93%, which is -6.71 percentage points higher than the average volatility over the past 100 days.