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4 Reasons Why PVH Corp (PVH) is Worth a Buy Post Q4 Earnings

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Shares of PVH Corp. (PVH - Free Report) gained 10.5% after the company reported stellar fourth-quarter fiscal 2017 results on Mar 28. Notably, this marked the 15th straight quarter of positive earnings surprise with sixth sales beat. Robust brand strength, solid surprise history, healthy balance sheet and efforts to keep pace with the evolving consumer trends have been the key growth drivers for the owner of Calvin Klein and Tommy Hilfiger brands.

A glimpse of this New-York based company’s price performance shows that it has outperformed the industry in a year’s time. The stock has surged 59.2% cruising well ahead of both the Textile-Apparel industry’s rally of 29.9% and the S&P 500 index’s gain of 13.3%. Currently, the industry ranks in the top 27% (70 of 256) of all Zacks industries.


 

Let’s delve deeper to explore this Zacks Rank #2 (Buy) company’s inherent strengths.

Efficient Brand Management

PVH Corp. has been scoring high on its premium Calvin Klein and Tommy Hilfiger brands. In fact, the brands are performing well worldwide and significantly contributing to the company’s performance and profitability. Calvin Klein’s revenue advanced 23% year over year in fourth-quarter fiscal 2017 while it grew 18% in constant currency. The segment’s International revenues were also up 33%. Revenues at Tommy Hilfiger jumped 22% and improved 15% in constant currency, while it surged 37% internationally. For fiscal 2018, revenues are anticipated to increase roughly 9% (or 7% on a currency-neutral basis) at Calvin Klein and 8% (or 4% on a currency-neutral basis) at Tommy Hilfiger. PVH Corp.’s diversified brand portfolio allows it to stay ahead of its peers and generate above-average industry growth.

Robust Q417 Results & View

As mentioned earlier, PVH Corp. posted solid fourth-quarter fiscal 2017 results, wherein the top and bottom lines outpaced the Zacks Consensus Estimate and surged year over year. Persistent momentum at the company’s premium brands along with currency tailwinds drove the quarterly results, which led to upbeat guidance.

The company’s earnings outlook for first-quarter and fiscal 2018 reflect significant currency tailwinds. For fiscal 2018, management projects revenues to rise 7% while constant-currency revenues are expected to grow 4% in comparison to fiscal 2017. Adjusted earnings per share are now envisioned in a band of $9.00-$9.10 compared with $7.94 last year.

For the fiscal first quarter, total revenues are projected to increase nearly 15% year over year while it is anticipated to advance 9% on a constant-currency basis. Additionally, management estimates adjusted earnings per share in the range of $2.20-$2.25 than $1.65 in the year-ago quarter. Favorable currency is likely to boost adjusted earnings by 20 cents per share in the first quarter and nearly 35 cents per share in fiscal 2018. (Read more: PVH Corp Tops on Q4 Earnings & Sales, Issues FY18 View)

PVH Corp. Price, Consensus and EPS Surprise

PVH Corp. Price, Consensus and EPS Surprise | PVH Corp. Quote

 

Uptrend in Earnings Estimates

PVH Corp.’s stellar quarterly performance and bullish outlook have been raising analysts’ optimism surrounding the stock. In a month, the Zacks Consensus Estimate of $9.10 for fiscal 2018 and $10.40 for fiscal 2019 witnessed upward revisions of 17 cents and 16 cents, respectively. Also, the consensus mark of $2.22 for the fiscal first quarter moved north by 27 cents in the last 30 days.

Healthy Cash Flows Bode Well

PVH Corp. boasts a healthy balance sheet, which offers it the financial flexibility to drive growth. Also, the company’s ability to generate a strong operating cash flow has helped in the execution of its long-term strategies such as global expansion, product enhancement and brand offerings, and building of operational infrastructure. In fact, PVH Corp’s financial strength is evident from its ongoing share repurchase program. In fiscal 2017, the company bought back 2.2 million shares for roughly $250 million under its $1.25 billion standing authorization that extends till Jun 3, 2020.

Wrapping Up

We note that PVH Corp. has been a strong contender in the industry and is also poised well for long-term growth based on these solid attributes. In fact, the stock appears to be a solid investment option now with a VGM Score of B and an expected long-term earnings growth rate of 13%.

Looking for More Solid Bets in PVH Corp.’s Space? Check These

Guess?, Inc. (GES - Free Report) has pulled off an average positive earnings surprise of 34.7% in the trailing four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Tailored Brands, Inc. , also a Zacks Rank #1 stock, has an impressive long-term earnings growth rate of 16.5%.

Ralph Lauren Corporation (RL - Free Report) , which carries a Zacks Rank #2, delivered an average earnings beat of 10.4% in the trailing four quarters.

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