Back to top

Will Brand Strength Drive PVH Corp's (PVH) Earnings in Q3?

Read MoreHide Full Article

PVH Corporation (PVH - Free Report) is slated to release third-quarter fiscal 2018 results on Nov 29. The company has an impressive earnings surprise history, having outpaced estimates for 17 consecutive quarters. It also delivered a sales beat in each of the trailing eight quarters.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $3.14, mirroring an improvement of roughly 4% from $3.02 in the prior-year quarter. Estimates remained stable over the past 30 days. For the impending quarter, management envisions adjusted earnings per share in the range of $3.10-$3.13. However, foreign currency is expected to hurt earnings by 9 cents per share.

PVH Corp. Price, Consensus and EPS Surprise

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

Let’s see how things are shaping up prior to this announcement.

What You Should Know Ahead of 3Q18

PVH Corp continues to benefit from its diversified brand portfolio, particularly Calvin Klein and Tommy Hilfiger brands. These brands are performing impressively in the domestic as well as international markets. Moreover, the company’s approach toward brand management is the key reason for the success of each of its brands as it helps in further developing these through efficient marketing strategies, financial control and operating leverage.

Additionally, management has been making efforts to boost growth at its Heritage Brands, which remains sluggish for some time now. In fact, the company continues to focus on the brand’s expansion and distribution besides extending its technological capabilities. In this regard it is imperative to mention that PVH Corp announced plans to launch the IZOD premium brand in Europe, spreading across Spain, Germany, the Netherlands and Scandinavia in fall this year. Moreover, it intends to expand the brand’s distribution in Europe, Russia and the Middle East regions in spring next year.

Brand-wise, sales are expected to grow 5% (or 7% on a currency-neutral basis) at Calvin Klein, 10% (or 12% on a currency-neutral basis) at Tommy Hilfiger and 8% at Heritage Brands in the fiscal third quarter.

The Zacks Consensus Estimate for third-quarter revenues at Calvin Klein, Tommy Hilfiger and Heritage Brands are pegged at $987 million, $1,116 million and $428 million, respectively. These reflect a year-over-year improvement of 4.7%, 9.5% and 8.1%, respectively.

Meanwhile, PVH Corp’s consistent efforts toward enhancing its e-commerce operations to drive top line bode well. Recently, the company announced that Wirecard — a global digital financial services provider — rolled out the ‘Try Before You Buy’ payment choice in collaboration with PVH’s European headquarters. This option enables customers to pay within 30 days after the delivery of their ordered products, making it convenient for trying out styles and other attributes.

Solid brand strength and other growth initiatives are expected to boost the company’s top line and profitability in the to-be-reported quarter. The Zacks Consensus Estimate for total revenues stands at $2,529 million for third-quarter fiscal 2018, reflecting a growth of 7.3%. This is almost in line with PVH Corp’s expectations of nearly 7% year over year growth. Further, the company anticipates sales to advance 9%, on a constant-currency basis.

However, PVH Corp operates in a highly fragmented market and faces intense competition, which along with volatility in the global environment remain major concerns. This might hurt the company’s growth and profitability.

Zacks Model

Our proven model does not conclusively show that PVH Corp is likely to beat earnings estimates in the fiscal third quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PVH Corp has a Zacks Rank #3 but the company’s Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

lululemon athletica inc. (LULU - Free Report) has an Earnings ESP of +4.89% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK'S Sporting Goods, Inc. (DKS - Free Report) has an Earnings ESP of +7.35% and a Zacks Rank #2.

Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +2.95% and a Zacks Rank #2.

Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

More from Zacks Analyst Blog

You May Like