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Is PVH Corp. (PVH) a Suitable Pick for Value Investors?
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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 17.56. This level compares favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 19.87.
If we focus on the long-term trend of the stock the current level puts PVH Corp.’s current PE among its highs over the observed period. This suggests that the stock is overvalued compared to its own historical levels.
Further, the stock’s PE compares favorably with its industry’s trailing twelve months PE ratio, which stands at 19.31. 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 16.32, which lower than the current level. So, it is fair to say that a slightly more value-oriented path may be ahead for PVH Corp. stock in the near term too.
PS 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 1.18. This is lower than the industry average, which comes in at 1.84x right now.
As we can see, the stock is trading at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, PVH Corp. currently has a Value Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes PVH Corp. an apt choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for PVH Corp. is just 1.29, a level that is lower than the industry average of 1.38. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, PVH is a solid choice 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 ‘A’ and a Momentum score of ‘A’. This gives PVH a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>).
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, PVH Corp. seems to have pretty striking prospects.
Meanwhile, the company’s earnings estimates have been trending upward lately. The current quarter has seen four estimates go higher in the past thirty days compared to none lower, while the full year estimate has seen six upward revisions and no downward revisions in the same time period.
This has had a small but meaningful impact on the consensus estimate as the current quarter consensus estimate has increased 3.2% over the past month, while the full year estimate has moved up 2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bullish trend indicates that analysts feel good about this company right now, despite the fact that the stock has just a Zacks Rank #3 (Hold), which signals expectations of 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. Moreover, a strong industry rank (Top 20% out of more than 250 industries) further supports the growth potential of the stock.
Moreover, the company recently posted better-than-expected earnings and sales results for second-quarter fiscal 2017. While sales marked its fourth consecutive beat, earnings retained its positive surprise trend for the 13th straight time. Results continued to gain from solid momentum at its Calvin Klein and Tommy Hilfiger brands, particularly in the international regions. Further, the company raised earnings outlook for fiscal 2017.
So, despite a Zacks Rank #3, we believe that it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Is PVH Corp. (PVH) a Suitable Pick 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 17.56. This level compares favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 19.87.
If we focus on the long-term trend of the stock the current level puts PVH Corp.’s current PE among its highs over the observed period. This suggests that the stock is overvalued compared to its own historical levels.
Further, the stock’s PE compares favorably with its industry’s trailing twelve months PE ratio, which stands at 19.31. 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 16.32, which lower than the current level. So, it is fair to say that a slightly more value-oriented path may be ahead for PVH Corp. stock in the near term too.
PS 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 1.18. This is lower than the industry average, which comes in at 1.84x right now.
As we can see, the stock is trading at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, PVH Corp. currently has a Value Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes PVH Corp. an apt choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for PVH Corp. is just 1.29, a level that is lower than the industry average of 1.38. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, PVH is a solid choice 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 ‘A’ and a Momentum score of ‘A’. This gives PVH a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>).
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, PVH Corp. seems to have pretty striking prospects.
Meanwhile, the company’s earnings estimates have been trending upward lately. The current quarter has seen four estimates go higher in the past thirty days compared to none lower, while the full year estimate has seen six upward revisions and no downward revisions in the same time period.
This has had a small but meaningful impact on the consensus estimate as the current quarter consensus estimate has increased 3.2% over the past month, while the full year estimate has moved up 2%. 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
This bullish trend indicates that analysts feel good about this company right now, despite the fact that the stock has just a Zacks Rank #3 (Hold), which signals expectations of 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. Moreover, a strong industry rank (Top 20% out of more than 250 industries) further supports the growth potential of the stock.
Moreover, the company recently posted better-than-expected earnings and sales results for second-quarter fiscal 2017. While sales marked its fourth consecutive beat, earnings retained its positive surprise trend for the 13th straight time. Results continued to gain from solid momentum at its Calvin Klein and Tommy Hilfiger brands, particularly in the international regions. Further, the company raised earnings outlook for fiscal 2017.
So, despite a Zacks Rank #3, we believe that it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>