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PVH Corp (PVH) Down for the Month: Should You Buy the Stock? (revised)
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PVH Corp. (PVH - Free Report) , which parents internationally acclaimed brands Calvin Klein and Tommy Hilfiger, has seen a substantial decrease in its stock value recently, leading investors to ponder whether it’s the right moment to buy.
Shares of PVH Corp. have underperformed the Zacks Textile – Apparel industry in the past month. The stock has declined 9.6% in this period, while the broader industry has dipped 7.1%. This decline is steeper compared to the broader Zacks Consumer Staples sector's decline of 1.8% and contrasts sharply with the substantial 4% increase in the S&P 500 index in the same timeframe.
Closing at $106.41, PVH is currently trading approximately 25% lower than its 52-week high of $141.15 reached on Apr 1, 2024. The stock's position below its 50 and 200-day moving averages signals potential bearish sentiment in recent trading activity.
Image Source: Zacks Investment Research
Exploring PVH’s Recent Market Setback
PVH Corp. suffered a slump in its stock price after its latest earnings report on Jun 4, which revealed a 10% revenue decline compared with a 2% rise reported a year ago. The company's international revenues declined 9% year over year, while wholesale revenues were down a significant 17% year over year.
Segment-wise, revenues for the Calvin Klein segment were flat year over year, while revenues for the Tommy Hilfiger brand declined 10% compared with the previous year. The Heritage Brands segment experienced a significant 65% decline in revenues year over year. Of this decline, about 47% resulted from the sale of Heritage Brands’ women's intimates business.
Due to the soft trends, management provided conservative guidance for the upcoming quarter and fiscal 2024. It expects a revenue decline of 6-7% year over year for both the fiscal second quarter and fiscal 2024. The expectations for the fiscal second quarter include a 3% reduction related to the sale of Heritage Brands. Meanwhile, the fiscal 2024 projection includes a 2% decrease due to the divestiture of the Heritage Brands women’s intimates business and a 1% impact from the 53rd week in fiscal 2023.
Investing in PVH Amid Challenges: A Strategic Move?
Although the above discussion might cause some concern, the company holds strong growth potential from an earnings standpoint. Despite the soft top-line trends, PVH has maintained strong gross margin levels of 61.4%, which expanded 350 bps year over year in first-quarter fiscal 2024. The company’s improved gross margin mainly comes from lower product costs, a favorable shift in channel mix and reduced sales to lower-margin wholesale accounts.
PVH’s earnings potential is well reflected by its forward guidance, which predicts the second-quarter fiscal 2024 GAAP EPS to be $2.25, up significantly from $1.50 in the prior-year quarter. For fiscal 2024, the company anticipates adjusted EPS of $11.00-$11.25, an increase from $10.68 reported in fiscal 2023. Additionally, the company is optimistic about its PVH+ Plan, aimed at driving sustainable growth by leveraging its core strengths and enhancing consumer connections for the Calvin Klein and Tommy Hilfiger brands.
This strategic initiative revolves around five key drivers: winning with product excellence, enhancing consumer engagement, leading the digital marketplace, developing a data-driven operational model, and driving efficiencies while investing in growth.
Notably, the company is committed to delivering superior products across its key growth categories and strengthening its presence in global markets where its iconic brands resonate strongly with consumers.
PVH is prioritizing digital growth by implementing a comprehensive distribution strategy encompassing digital channels, direct-to-consumer platforms and strategic wholesale partnerships.
Upward Trend in Estimates
The company’s proactive approach has been validated by upward revisions in earnings estimates. Over the past 30 days, the Zacks Consensus Estimate for the current and the next fiscal year has risen by 0.7% and 0.4% to $11.24 and $12.92, respectively.
The consensus estimate for PVH’s fiscal 2024 and 2025 EPS suggests year-over-year growth of 5.2% and 14.9%, respectively, showcasing the company’s earnings growth potential.
Image Source: Zacks Investment Research
Valuation
PVH Corp is currently trading at a forward 12-month P/E multiple of 8.88X, significantly cheaper than the industry’s average of 12.36X and the S&P 500’s 21.92X. This makes the stock an attractive pick for investors.
The stock also trades at a discount to its peers, including lululemon athletica (LULU - Free Report) , Columbia Sportswear (COLM - Free Report) and Crocs Inc. (CROX - Free Report) trading at forward 12-month P/E multiple of 19.41X, 19.01X and 10.8%, respectively.
Image Source: Zacks Investment Research
Final Thoughts
While the recent stock decline may seem concerning, PVH Corp's diversified brand portfolio allows it to stay ahead of its peers and sustain its position in a challenging environment. With robust core strengths, connecting brands with consumers, and driving digital and operational efficiencies, PVH Corp showcases its resilience in the face of economic uncertainties. Based on the strength of its brands, coupled with opportunities related to distribution, the company is surely poised for long-term growth.
Given the company’s growth prospects, its current price and cheap valuation suggest a compelling entry point for investors eager to invest in this profitable lifestyle stock for the long term. For those who already own the stock, stay invested for solid long-term prospects. PVH currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
(NOTE: We are reissuing this article to correct an error. The original version, released yesterday, July 10, 2024, shall no longer be relied upon.)
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PVH Corp (PVH) Down for the Month: Should You Buy the Stock? (revised)
PVH Corp. (PVH - Free Report) , which parents internationally acclaimed brands Calvin Klein and Tommy Hilfiger, has seen a substantial decrease in its stock value recently, leading investors to ponder whether it’s the right moment to buy.
Shares of PVH Corp. have underperformed the Zacks Textile – Apparel industry in the past month. The stock has declined 9.6% in this period, while the broader industry has dipped 7.1%. This decline is steeper compared to the broader Zacks Consumer Staples sector's decline of 1.8% and contrasts sharply with the substantial 4% increase in the S&P 500 index in the same timeframe.
Closing at $106.41, PVH is currently trading approximately 25% lower than its 52-week high of $141.15 reached on Apr 1, 2024. The stock's position below its 50 and 200-day moving averages signals potential bearish sentiment in recent trading activity.
Image Source: Zacks Investment Research
Exploring PVH’s Recent Market Setback
PVH Corp. suffered a slump in its stock price after its latest earnings report on Jun 4, which revealed a 10% revenue decline compared with a 2% rise reported a year ago. The company's international revenues declined 9% year over year, while wholesale revenues were down a significant 17% year over year.
Segment-wise, revenues for the Calvin Klein segment were flat year over year, while revenues for the Tommy Hilfiger brand declined 10% compared with the previous year. The Heritage Brands segment experienced a significant 65% decline in revenues year over year. Of this decline, about 47% resulted from the sale of Heritage Brands’ women's intimates business.
Due to the soft trends, management provided conservative guidance for the upcoming quarter and fiscal 2024. It expects a revenue decline of 6-7% year over year for both the fiscal second quarter and fiscal 2024. The expectations for the fiscal second quarter include a 3% reduction related to the sale of Heritage Brands. Meanwhile, the fiscal 2024 projection includes a 2% decrease due to the divestiture of the Heritage Brands women’s intimates business and a 1% impact from the 53rd week in fiscal 2023.
Investing in PVH Amid Challenges: A Strategic Move?
Although the above discussion might cause some concern, the company holds strong growth potential from an earnings standpoint. Despite the soft top-line trends, PVH has maintained strong gross margin levels of 61.4%, which expanded 350 bps year over year in first-quarter fiscal 2024. The company’s improved gross margin mainly comes from lower product costs, a favorable shift in channel mix and reduced sales to lower-margin wholesale accounts.
PVH’s earnings potential is well reflected by its forward guidance, which predicts the second-quarter fiscal 2024 GAAP EPS to be $2.25, up significantly from $1.50 in the prior-year quarter. For fiscal 2024, the company anticipates adjusted EPS of $11.00-$11.25, an increase from $10.68 reported in fiscal 2023.
Additionally, the company is optimistic about its PVH+ Plan, aimed at driving sustainable growth by leveraging its core strengths and enhancing consumer connections for the Calvin Klein and Tommy Hilfiger brands.
This strategic initiative revolves around five key drivers: winning with product excellence, enhancing consumer engagement, leading the digital marketplace, developing a data-driven operational model, and driving efficiencies while investing in growth.
Notably, the company is committed to delivering superior products across its key growth categories and strengthening its presence in global markets where its iconic brands resonate strongly with consumers.
PVH is prioritizing digital growth by implementing a comprehensive distribution strategy encompassing digital channels, direct-to-consumer platforms and strategic wholesale partnerships.
Upward Trend in Estimates
The company’s proactive approach has been validated by upward revisions in earnings estimates. Over the past 30 days, the Zacks Consensus Estimate for the current and the next fiscal year has risen by 0.7% and 0.4% to $11.24 and $12.92, respectively.
The consensus estimate for PVH’s fiscal 2024 and 2025 EPS suggests year-over-year growth of 5.2% and 14.9%, respectively, showcasing the company’s earnings growth potential.
Image Source: Zacks Investment Research
Valuation
PVH Corp is currently trading at a forward 12-month P/E multiple of 8.88X, significantly cheaper than the industry’s average of 12.36X and the S&P 500’s 21.92X. This makes the stock an attractive pick for investors.
The stock also trades at a discount to its peers, including lululemon athletica (LULU - Free Report) , Columbia Sportswear (COLM - Free Report) and Crocs Inc. (CROX - Free Report) trading at forward 12-month P/E multiple of 19.41X, 19.01X and 10.8%, respectively.
Image Source: Zacks Investment Research
Final Thoughts
While the recent stock decline may seem concerning, PVH Corp's diversified brand portfolio allows it to stay ahead of its peers and sustain its position in a challenging environment. With robust core strengths, connecting brands with consumers, and driving digital and operational efficiencies, PVH Corp showcases its resilience in the face of economic uncertainties.
Based on the strength of its brands, coupled with opportunities related to distribution, the company is surely poised for long-term growth.
Given the company’s growth prospects, its current price and cheap valuation suggest a compelling entry point for investors eager to invest in this profitable lifestyle stock for the long term. For those who already own the stock, stay invested for solid long-term prospects. PVH currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
(NOTE: We are reissuing this article to correct an error. The original version, released yesterday, July 10, 2024, shall no longer be relied upon.)