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Consumer Space Looks Chic: Buy PVH Corp (PVH) to Gain Share

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PVH Corp. (PVH - Free Report) looks like a strong contender in the apparel industry gaining from its robust surprise trend, brand strength and strategic initiatives. The company’s efforts to keep pace with the evolving consumer trends in the retail space uphold its fundamental strengths, making this New York-based company’s shares a must buy.

This premium lifestyle company has seen its shares advance 11.3% in the last three months, outpacing the industry’s upside of 2.3%. Currently, the industry is placed at the top 20% of the Zacks classified industries (50 out of 256). In fact, the company’s shares have substantially outperformed the broader Consumer Discretionary sector’s gain of 1.6%, which is placed at the top 44% (7 out of 16) of the Zacks classified sectors.



The Consumer Discretionary space is gaining from favorable consumer trends supported by favorable gross domestic product (GDP) growth, a chic labor market and increased consumer spending. Further, the new tax reforms proposed by President Donald Trump instil optimism. Notably, the sector has recorded growth of 11.6% year to date.

Coming back to PVH, its VGM Score of B and long-term earnings growth rate of 13.1% look encouraging. That said, let’s find out more about the factors aiding this Zacks Rank #2 (Buy) stock’s performance.

Solid Surprise History

PVH has delivered a robust earnings surprise trend for quite a while now. The company has beat bottom-line estimates for 13 straight quarters, with an average four-quarter beat of 3.6%. Additionally, the company boasts of having delivered positive sales surprise in the preceding four quarters. This solid trend is primarily driven by solid momentum at the company’s premium Calvin Klein and Tommy Hilfiger brands, particularly in the international regions.

PVH Corp. Price, Consensus and EPS Surprise

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

Robust Outlook Drive Estimates Up

Encouraged by the solid second-quarter fiscal 2017 results, PVH raised earnings outlook for fiscal 2017 and initiated guidance for fiscal third quarter. For fiscal 2017, the company projects revenues to rise 6% year over year, while currency neutral revenues are expected to grow 5%. Management now envisions fiscal 2017 adjusted earnings per share in the range of $7.60-$7.70, compared with $7.40-$7.50 expected earlier.

Consequently, the Zacks Consensus Estimate for fiscal 2017 and 2018 witnessed an uptrend in the last 60 days. Estimate for fiscal 2017 increased nearly 2.5% to $7.73 per share and for fiscal 2018 it rose 4.2% to $8.74 per share.

Brand Strength Keeps It Ahead of the Curve

PVH’s diversified brand portfolio allows it to stay ahead of its peers to generate above-average industry growth and sustain its position in the current challenging environment. The company’s approach to brand management facilitates each of its brands to develop further through efficient marketing strategies, financial control and operating leverage. Based on the strength of many of its brands, particularly Tommy Hilfiger and Calvin Klein, along with opportunities with regard to distribution, we believe that the company is poised for long-term growth.

Strategy to Keep Pace with Evolving Retail Trends

PVH has been undertaking significant steps to keep pace with the evolving retail trends and integrate consumers’ changing preferences into operating decisions. In fact, these constant endeavors have helped the company to stay afloat even in a challenging retail landscape.

Some recent evidences of PVH’s growth efforts include its latest agreement with Li & Fung, which is likely to enhance the former’s supply-chain network. Moreover, the company inked a deal to acquire True&Co, which is a direct-to-consumer intimate apparel online retailer. This deal underscores the company’s focus on making innovations and developing omni-channel operations to enrich consumer experience. We believe that PVH is moving in the right direction and these strategies will help it to exploit opportunities in the lifestyle apparel market.

Bottom Line

Though currency headwinds, volatile retail backdrop and unpredictable global consumer spending remain hurdles, the company’s brand strength and efforts to match consumers’ needs position it for solid long-term growth.

Looking for Some Trending Picks? Look at These

Better-ranked stocks in the same industry include Crocs, Inc. (CROX - Free Report) , Guess?, Inc. (GES - Free Report) and G-III Apparel Group, LTD. (GIII - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Crocs has a long-term EPS growth rate of 15%. Further, the stock has returned 24.3% in the last three months.

Guess? has grown 35.6% in the last three months. Moreover, it has a long-term earnings growth rate of 17.5%.

G-III Apparel has improved 18% in the last three months. Further, the company has a long-term EPS growth rate of 15%.

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In-Depth Zacks Research for the Tickers Above


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Guess?, Inc. (GES) - free report >>

PVH Corp. (PVH) - free report >>

Crocs, Inc. (CROX) - free report >>

G-III Apparel Group, LTD. (GIII) - free report >>


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