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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put PVH Corp. (PVH - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, PVH Corp. has a trailing twelve months PE ratio of 12.73, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 19.61. If we focus on the long-term PE trend, PVH Corp.’s current PE level puts it below its midpoint over the past five years, with the number having fallen rapidly over the past couple of months.
Further, the stock’s PE also compares favorably with the Zacks classified Textile-Apparel manufacturing industry’s trailing twelve months PE ratio, which stands at 17.74. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that PVH Corp has a forward PE ratio (price relative to this year’s earnings) of just 13.38, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, PVH Corp. has a P/S ratio of about 0.89. This is significantly lower than the S&P 500 average, which comes in at 2.93 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, PVH Corp. currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes PVH Corp. a solid choice for value investors.
Additionally, the PEG ratio for PVH Corp. is just 1.25, a level that is lower than the industry average of 2.11. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, PVH is a solid pick on the value front from multiple angles.
What About the Stock Overall?
Though PVH Corp. might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘A’. Still, PVH Corp. has a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates for the current quarter have been dismal, with four estimates going south in the past two months, compared to no movement in the opposite direction. However, the full year estimates have been favorable with six estimates moving up in the last 2 months, compared to just one downward revision.
As a result, the consensus estimate of the stock for the current quarter has moved down by 10.2% in the last two months, while the full year estimate has inched up 0.1% over the same time frame. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
PVH Corp. is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among the Bottom 18%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks categorized Textile-Apparel Manufacturing industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is PVH Corp a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put PVH Corp. (PVH - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, PVH Corp. has a trailing twelve months PE ratio of 12.73, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 19.61. If we focus on the long-term PE trend, PVH Corp.’s current PE level puts it below its midpoint over the past five years, with the number having fallen rapidly over the past couple of months.
Further, the stock’s PE also compares favorably with the Zacks classified Textile-Apparel manufacturing industry’s trailing twelve months PE ratio, which stands at 17.74. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that PVH Corp has a forward PE ratio (price relative to this year’s earnings) of just 13.38, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, PVH Corp. has a P/S ratio of about 0.89. This is significantly lower than the S&P 500 average, which comes in at 2.93 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, PVH Corp. currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes PVH Corp. a solid choice for value investors.
Additionally, the PEG ratio for PVH Corp. is just 1.25, a level that is lower than the industry average of 2.11. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, PVH is a solid pick on the value front from multiple angles.
What About the Stock Overall?
Though PVH Corp. might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘A’. Still, PVH Corp. has a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates for the current quarter have been dismal, with four estimates going south in the past two months, compared to no movement in the opposite direction. However, the full year estimates have been favorable with six estimates moving up in the last 2 months, compared to just one downward revision.
As a result, the consensus estimate of the stock for the current quarter has moved down by 10.2% in the last two months, while the full year estimate has inched up 0.1% over the same time frame. You can see the consensus estimate trend and recent price action for the stock in the chart below:
PVH CORP Price and Consensus
PVH CORP Price and Consensus | PVH CORP Quote
Bottom Line
PVH Corp. is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among the Bottom 18%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks categorized Textile-Apparel Manufacturing industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>