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PVH Corp Rides High on Brand Strength & Other Initiatives

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PVH Corp. (PVH - Free Report) looks promising on the back of robust brand strength, impressive surprise history, healthy balance sheet and efforts to keep pace with the evolving consumer trends. Also, the company has topped the earnings estimates for the 15th consecutive quarter with sixth straight sales beat.

These factors have raised investors’ confidence in this Zacks Rank #2 (Buy) stock. In a year’s time, PVH Corp. outperformed the Textile-Apparel industry and the broader sector. While shares of the company surged a whopping 52.5%, the industry and the Consumer Discretionary sector gained 32.9% and 7.2%, respectively. We believe that momentum is still left in the stock as it has a VGM Score of A and long-term earnings growth rate of 13%.



 

Let’s Delve Deeper

PVH Corp. has been doing extremely well, courtesy of its brand strength, Calvin Klein and Tommy Hilfiger in particular. In fact, these two brands are performing impressively worldwide and significantly contributing to the company’s profitability. Also, its approach toward brand management facilitates each of its brands to develop further through efficient marketing strategies, financial control and operating leverage. We believe that opportunities with regard to distribution, alongside a diversified brand portfolio poise the company for long-term growth.

Furthermore, management issued robust guidance for the Calvin Klein and Tommy Hilfiger brands. 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. For the fiscal first quarter, the company expects revenues to grow 17% (or 12% on a currency-neutral basis) at Calvin Klein and 19% (or 10% on a currency-neutral basis) at Tommy Hilfiger.

PVH Corp. also has a significant international presence and outlets in various tourist destinations in the United States. Impressively, currency has been favorably impacting the company’s results. Given sturdy fourth-quarter fiscal 2017 and currency tailwinds, management issued bullish guidance for first-quarter and fiscal 2018. It expects favorable currency to boost adjusted earnings by 20 cents per share in the first quarter and nearly 35 cents per share in fiscal 2018.

Moreover, analysts are growing bullish on PVH Corp. as apparent from its earnings estimate revisions. The Zacks Consensus Estimate of $9.15 for fiscal 2018 and $10.47 for fiscal 2019 has moved up by a penny, respectively, in the last 30 days. Management envisions fiscal 2018 adjusted earnings per share in the range of $9.00-$9.10 compared with $7.94 last year.

Additionally, PVH Corp. boasts a healthy balance sheet, which provides it the financial flexibility to drive future growth. In fact, 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.

Based on these above-mentioned tailwinds, we believe PVH Corp. is a favorable investment option now.

Want More of Textile-Apparel Stocks? Check These

Delta Apparel, Inc. (DLA - Free Report) has pulled off an average positive earnings surprise of 71.2% in the trailing four quarters. The company has a long-term earnings growth rate of 15% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Tailored Brands, Inc. (TLRD - Free Report) delivered an average positive earnings surprise of 50.9% in the trailing four quarters. Moreover, it has an impressive long-term earnings growth rate of 16.5% and a Zacks Rank #2.

Ralph Lauren Corporation (RL - Free Report) , also a Zacks Rank #2 stock, delivered an average earnings beat of 10.4% in the trailing four quarters. It also has a long-term earnings growth rate of 10.2%.

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