PVH Corporation (PVH - Free Report) has long been an investors’ favorite driven by solid surprise history, brand strength, innovations, omni-channel growth and healthy balance sheet. The company’s diversified brand portfolio allows it to stay ahead of peers to generate above-average industry growth and sustain its position in the current challenging environment.
Notably, the company has gained 19.5% in the last six months, outperforming the industry’s 12.5% growth. Further, the company’s Zacks Rank #2 (Buy) and long-term earnings growth rate of 13%, highlight its growth prospects. That said, let’s analyze the factors aiding the stock’s performance.
Robust Surprise Trend Builds Optimism
PVH Corp has been delivering robust top and bottom-line performances for quite a while now as evident from its robust surprise history. The company delivered better-than-expected results for third-quarter fiscal 2017, wherein sales marked its fifth consecutive beat and earnings topped estimates for the 14th consecutive quarter. Results continued to gain from solid momentum at the company’s premium Calvin Klein and Tommy Hilfiger brands, particularly in the international regions.
Strong Fourth Quarter and FY17 View Drive Estimates
Driven by the solid third-quarter results, improvement in foreign currency rates and continued strength across its brands, PVH Corp anticipates delivering robust revenues and earnings in fourth-quarter 2017. This favorable view further backed by the strong start to the holiday season and the additional $20 million increase in marketing expenditures to take advantage of the continued momentum across its businesses. Moreover, the company raised guidance for fiscal 2017 on the aforementioned favorable trends.
Consequently, the company’s estimates witnessed an uptrend in the last 30 days. The Zacks Consensus Estimate for fiscal 2017 moved up by 4 cents to $7.79 per share.
Growth Strategies Bode Well
PVH Corp 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 Corp’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 its focus on making innovations and developing omni-channel operations to enrich consumer experience. We believe that PVH Corp is moving in the right direction and these strategies will help it to exploit opportunities in the lifestyle apparel market.
Further, 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.
Strong Balance Sheet Supports Growth & Enhances Shareholder Value
PVH Corp’s healthy balance sheet provides it with the financial flexibility to drive future growth. 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. Moreover, the company’s financial strength is evident from its ongoing share repurchase program. In fiscal 2017, the company plans to buyback shares worth $200-$250 million.
Looking for More? Check these 3 Trending Retail Stocks
Some top-ranked stocks in the same industry are G-III Apparel Group, LTD. (GIII - Free Report) , Michael Kors Holdings Limited (KORS - Free Report) and Tailored Brands Inc. (TLRD - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
G-III Apparel has gained 26.2% in the last three months. Moreover, it has a long-term earnings growth rate of 15%.
Michael Kors has a long-term EPS growth rate of 7.5%. Further, the stock has returned 32.3% in three months.
Tailored Brands has grown nearly 52.1% in the last three months. Moreover, it has a long-term earnings growth rate of 16.5%.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
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