PVH Corporation (PVH Quick QuotePVH - Free Report) is likely to post a year-over-year decline in its top and bottom lines when it reports third-quarter fiscal 2024 results on Dec. 4, after market close. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.2 billion, indicating a drop of 5.9% from the prior-year number.

The consensus estimate for earnings is pegged at $2.61 per share, which indicates a decline of 10% year over year. The consensus mark has remained stable in the past 30 days.

In the last reported quarter, the company delivered an earnings surprise of 32.6%. It has a trailing four-quarter earnings surprise of 14.9%, on average.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Factors Likely to Impact PVH’s Q3 Earnings

PVH Corp. has been grappling with a tough operating backdrop for a while now. The company has been witnessing sluggishness in its Heritage Brands segment for quite some time now, owing to the decline in the sale of the Heritage Brands women's intimates business. Higher raw material costs and currency headwinds are likely to have been concerning. Also, increased investments in direct-to-consumer and international businesses are likely to have added up to extra costs and hurt profitability. 

On its last earnings call, management had guided revenues to decline in the range of 6-7% (down 7-8% in constant currency) year over year for the fiscal third quarter . This included a 2% reduction related to the Heritage intimates business sale. The third-quarter operating margin is likely to have declined year over year as increased gross margins will more than offset the loss of leverage on lower revenues. PVH had envisioned adjusted earnings per share (EPS) to be $2.50, down from $2.90 earned in the year-ago quarter, including an unfavorable currency impact of 5 cents a share. 

Management further anticipated a high single-digit revenue decrease in the wholesale business, , including a 5% decline from the sale of the Heritage intimates business, while the rest of the decline would be mainly due to the quality of sales focus in Europe. The Zacks Consensus Estimate for Tommy Hilfiger and Calvin Klein sales is currently pegged at $1.2 billion and $997 million, respectively, indicating a year-over-year drop of 4.2% and 1.7%.

On the flip side, PVH Corp.’s PVH+ Plan appears encouraging. The plan mainly aims at accelerating growth by boosting its core strengths and connecting Calvin Klein and TOMMY HILFIGER brands with the consumers. PVH strives to create the best products across its significant growth categories. It expects to strengthen its presence in the global demand spaces where its iconic labels resonate well with consumers. Gains from these efforts are likely to have provided some cushion to the quarterly performance.

What the Zacks Model Unveils for PVH

Our proven model does not conclusively predict an earnings beat for PVH Corp. this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

PVH Corp. has an Earnings ESP of -1.46% and a Zacks Rank of 3. You can uncover the best stocks before they're reported with our Earnings ESP Filter.

PVH’s Valuation Picture

From a valuation perspective, PVH Corp.’s shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 8.60X, below the five-year median of 9.54X and the Textile - Apparel industry’s average of 13.76X, the stock offers compelling value for investors seeking exposure to the sector.

Stocks With the Favorable Combination

Here are some companies, which according to our model, have the right combination of elements to post an earnings beat this season:

Torrid Holdings (CURV Quick QuoteCURV - Free Report) presently has an Earnings ESP of +23.08% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.  

The company is likely to register growth in the top and bottom lines when it reports third-quarter fiscal 2024 results. The consensus mark for CURV’s quarterly revenues is pegged at $2.8 billion, which indicates 2.7% growth from the figure reported in the prior-year quarter. 

The consensus mark for Torrid Holdings’ quarterly earnings has moved up a penny in the past 30 days to 3 cents per share. The consensus estimate indicates an increase of 200% from the year-ago quarter’s actual.

Dollar Tree (DLTR Quick QuoteDLTR - Free Report) currently has an Earnings ESP of +2.80% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports third-quarter fiscal 2024 results. The consensus mark for DLTR’s quarterly revenues is pegged at $7.5 billion, which indicates growth of 1.9% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Dollar Tree’s earnings has moved up a penny to $1.07 per share in the past 30 days. The consensus estimate indicates a rise of 10.3% from the year-ago quarter’s actual.

lululemon athletica (LULU Quick QuoteLULU - Free Report) currently has an Earnings ESP of +0.25% and a Zacks Rank of 3. LULU is likely to register top-line growth when it reports third-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.4 billion, indicating 6.8% growth from the figure reported in the year-ago quarter.

The consensus estimate for LULU’s earnings has been stable at $2.73 per share in the past 30 days. The consensus estimate indicates a rise of 7.9% from the year-ago quarter’s actual.