Should You Take Profits at Gildan Activewear?

Gildan Activewear (TSX:GIL)(NYSE:GIL) stock has surged 17.2% over a three-month span as of close on December 6. This surge has pushed shares into positive territory for 2018 – up 9% for the year so far. Taking a glance at its technicals, Gildan last had an RSI of 73, indicating that it is overbought as of Thursday’s close.

Gildan released its third-quarter results on November 1. The company reported diluted earnings per share of $0.55 which were up 5.8% year-over-year and had climbed 7.5% from the prior year on an adjusted basis.

Net sales increased 5% while international sales posted impressive 28% growth in the quarter. Gildan has been able to capitalize on mass retailers turning toward private label brands. Its e-commerce business has also shown impressive growth.

Year-to-date net sales have climbed 3.3% to $2.16 billion which has been powered by an 11% increase in activewear sales. However, on an adjusted basis net earnings have dropped to $304.2 million or $1.43 per share compared to $319.3 million or $1.41 per share in the first nine months of 2017.

Gildan also narrowed its adjusted diluted earnings per share range to $1.85 to $1.87 compared to the previous range high of $1.90.

Gildan also announced a cash dividend of $0.112 per share which represents a modest 1.3% yield. Back in the summer I’d recommended investors take advantage of the late July dip.

Those who did so have made a tidy sum, but overbought signals should inspire holders to take some of their profits this December.