PVH Corp Up 27% in a Year: Should You Buy or Hold the Stock?
Shares of PVH Corporation PVH have surged 27.4% in the past year, outperforming the Zacks Textile - Apparel industry’s 1.1% decline and the broader Consumer Discretionary sector’s 16.4% rise. This upside can be attributed to the company’s smooth execution of its PVH+ Plan, which aims to deliver sustainable growth. Strength in brands, particularly Calvin Klein and TOMMY HILFIGER, is an added positive.
Currently priced at $97.13, PVH stock is trading at 31.2% to its 52-week high of $141.15, reached on April 1, 2024. However, it is trading at a 40.2% premium to its 52-week low mark.
Strategies Support PVH’s Rally
PVH Corp enters the next level of PVH+ Plan execution. In Europe, the company is on track with its efforts regarding the targeted quality of sales. In APAC, it has been seeing robust consumer engagement. PVH strives to create the best products across its significant growth categories.
The PVH+ Plan is focused on five key drivers, which are win with product; win with consumer engagement; win in the digitally-led marketplace; develop a demand and data-driven operating model; and drive efficiencies and invest in growth. Management reinforces the Calvin Klein and TOMMY HILFIGER brands so that these can cater to consumers’ needs in new and engaging ways. This fall marks the first product season when the company is influencing product execution for the brands globally.
PVH's Price Performance
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PVH’s constant efforts to expand its international business also bode well. The company is experiencing robust growth in the Asia-Pacific region. Additionally, it has been strategically reducing sales in Europe to improve overall sales quality. It concentrates on advancing its product offers and innovating its key products with the help of D2C.
PVH’s Solid Earnings Estimate Revisions
Given the positivity surrounding the stock, the Zacks Consensus Estimate for fiscal 2024 has been northbound. In the past 30 days, the consensus estimate for earnings per share (EPS) for the current fiscal year has been revised 3.1% to $11.59.
PVH Stock’s Valuation
PVH stock is trading at an attractive valuation relative to the industry. Going by the price/earnings ratio, the stock is currently trading at 7.87 on a forward 12-month basis, lower than 12.44 of the industry.
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Bumps in PVH’s Growth Strategy
Despite the growth catalysts, PVH struggles with a tough operating landscape, including inflationary pressures and foreign currency translations. Its Wholesale unit also remains weak, largely due to lower sales of the Heritage Brands women's intimates business and ongoing efforts to reduce wholesale revenues in Europe.
Management expressed caution regarding the third quarter and fiscal 2024. For the third quarter, revenues are projected to decline in the range of 6-7% (down 7-8% in constant currency) from the year-ago quarter, including a 2% reduction related to the Heritage intimates’ business sale. Wholesale revenues are anticipated to drop in the high single-digits. Adjusted EPS is likely to be $2.50, down from $2.90 in the year-ago quarter, with currency headwinds of 5 cents a share.
For fiscal 2024, the company anticipates a year-over-year revenue decline in the range of 6-7%, which is consistent on a constant currency basis. This includes a 2% reduction due to the divestiture of the Heritage Brands women’s intimates business and a 1% impact from the 53rd week in fiscal 2023. The outlook for Europe remains unchanged, projecting a decline in the high single digits in euros with DTC down in the low single digits.
Final Words on PVH Stock
PVH Corp’s robust strategies, including immense strength in its core brands and expansion endeavors, position it well for long-term growth. Solid upward revisions in earnings estimates and the stock’s attractive valuation seem encouraging. However, the recent challenges coupled with a fluid operating environment cannot be ignored in the near term. PVH currently carries a Zacks Rank #3 (Hold).
Key Picks
We have highlighted three better-ranked stocks, namely, G-III Apparel Group GIII, Crocs CROX and Royal Caribbean RCL.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 14.9%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS implies an improvement of 4% and 6.8%, respectively, from the prior-year actuals.
Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 18.1% and 71.1%, respectively, from the year-ago levels.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
PVH Corp. (PVH) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report