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Will PVH Corp.'s (PVH) Q4 Reverse its Earnings Streak?
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PVH Corp. (PVH - Free Report) is scheduled to release fourth-quarter fiscal 2016 results on Mar 22. The big question facing investors is whether this textile-apparel company will be able to deliver a positive earnings surprise in the quarter to be reported.
Last quarter, PVH Corp. posted a positive earnings surprise of 7.9%. Further, the company has outperformed the Zacks Consensus Estimate by 8.1% in the trailing four quarters. A look at PVH Corp.’s earnings estimates revisions shows that the Zacks Consensus Estimate for both, the fourth quarter and fiscal 2016 has been stable, over the last 30 days. However, the current Zacks Consensus Estimate of $1.23 per share for the fiscal fourth quarter reflects a year-over-year decline of 19.4%. Also, analysts polled by Zacks expect revenues of $2.1 billion, down a little over 1% from the year-ago quarter.
On the back of solid performance delivered by the company’s premium brands – Calvin Klein and Tommy Hilfiger – PVH Corp. has been putting up a superb show even amid a tough macroeconomic backdrop. Consequently, the company has outperformed the Zacks categorized Textile – Apparel Manufacturing industry in the past one year, with a return of 4.5%, compared to the industry’s decline of 24.7%.
While these factors and a raised forecast for fiscal 2016 highlight its potential, management remains cautious of the overall volatility in the U.S. retail segment, intense promotions and unpredictable global consumer spending. Further, the company’s international presence and outlets in various tourist destinations in the U.S. expose it to foreign currency risks in the current scenario.
In fact, the company expects currency headwinds to persist and impact results in the fourth quarter and fiscal 2016. Evidently, the company envisions fiscal 2016 adjusted earnings per share in the range of $6.70–6.75, which includes an expected $1.65 per share negative impact from currency headwinds. Revenues for fiscal 2016 are anticipated to grow 2% year over year, while on a currency neutral basis revenues are expected to rise about 3%.
For the fourth quarter, the company expects total revenue to dip 1% year over year, while it is anticipated to inch up 1% on a constant-currency basis. Further, fourth quarter revenues are expected to bear the brunt of Mexico deconsolidation and the licensing agreement with G-III Apparel Group, Ltd. Adjusted earnings per share for the fourth quarter are expected to be $1.13–$1.18, including 23 cents per share negative impact from currency translations. Thus, we remain somewhat apprehensive of the company’s ability to maintain its robust earnings surprise trend.
Earnings Whispers
Our proven model does not conclusively show that PVH Corp. is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:
Zacks ESP: PVH Corp. currently has an Earnings ESP of 0.00%. This is because both, the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.23. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PVH Corp. carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Constellation Brands, Inc. (STZ - Free Report) , slated to report earnings on Apr 6, currently has an Earnings ESP of +2.21% and a Zacks Rank #3.
Fastenal Company (FAST - Free Report) , expected to release earnings on Apr 11, currently has an Earnings ESP of +2.17% and a Zacks Rank #3.
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Image: Bigstock
Will PVH Corp.'s (PVH) Q4 Reverse its Earnings Streak?
PVH Corp. (PVH - Free Report) is scheduled to release fourth-quarter fiscal 2016 results on Mar 22. The big question facing investors is whether this textile-apparel company will be able to deliver a positive earnings surprise in the quarter to be reported.
Last quarter, PVH Corp. posted a positive earnings surprise of 7.9%. Further, the company has outperformed the Zacks Consensus Estimate by 8.1% in the trailing four quarters. A look at PVH Corp.’s earnings estimates revisions shows that the Zacks Consensus Estimate for both, the fourth quarter and fiscal 2016 has been stable, over the last 30 days. However, the current Zacks Consensus Estimate of $1.23 per share for the fiscal fourth quarter reflects a year-over-year decline of 19.4%. Also, analysts polled by Zacks expect revenues of $2.1 billion, down a little over 1% from the year-ago quarter.
PVH Corp. Price and EPS Surprise
PVH Corp. Price and EPS Surprise | PVH Corp. Quote
Factors Influencing this Quarter
On the back of solid performance delivered by the company’s premium brands – Calvin Klein and Tommy Hilfiger – PVH Corp. has been putting up a superb show even amid a tough macroeconomic backdrop. Consequently, the company has outperformed the Zacks categorized Textile – Apparel Manufacturing industry in the past one year, with a return of 4.5%, compared to the industry’s decline of 24.7%.
While these factors and a raised forecast for fiscal 2016 highlight its potential, management remains cautious of the overall volatility in the U.S. retail segment, intense promotions and unpredictable global consumer spending. Further, the company’s international presence and outlets in various tourist destinations in the U.S. expose it to foreign currency risks in the current scenario.
In fact, the company expects currency headwinds to persist and impact results in the fourth quarter and fiscal 2016. Evidently, the company envisions fiscal 2016 adjusted earnings per share in the range of $6.70–6.75, which includes an expected $1.65 per share negative impact from currency headwinds. Revenues for fiscal 2016 are anticipated to grow 2% year over year, while on a currency neutral basis revenues are expected to rise about 3%.
For the fourth quarter, the company expects total revenue to dip 1% year over year, while it is anticipated to inch up 1% on a constant-currency basis. Further, fourth quarter revenues are expected to bear the brunt of Mexico deconsolidation and the licensing agreement with G-III Apparel Group, Ltd. Adjusted earnings per share for the fourth quarter are expected to be $1.13–$1.18, including 23 cents per share negative impact from currency translations. Thus, we remain somewhat apprehensive of the company’s ability to maintain its robust earnings surprise trend.
Earnings Whispers
Our proven model does not conclusively show that PVH Corp. is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:
Zacks ESP: PVH Corp. currently has an Earnings ESP of 0.00%. This is because both, the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.23. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PVH Corp. carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Conagra Brands, Inc. (CAG - Free Report) , expected to release earnings on Apr 6, currently has an Earnings ESP of +4.44% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here
Constellation Brands, Inc. (STZ - Free Report) , slated to report earnings on Apr 6, currently has an Earnings ESP of +2.21% and a Zacks Rank #3.
Fastenal Company (FAST - Free Report) , expected to release earnings on Apr 11, currently has an Earnings ESP of +2.17% and a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>