Can PVH Corp (PVH) Retain Positive Earnings Trend in Q1?

Zacks Equity Research

PVH Corporation PVH is slated to release first-quarter fiscal 2019 results on May 29.

Notably, the company has an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate in the last 19 quarters. Also, it came up with an average trailing four-quarter beat of 3.9%.

For first-quarter earnings, the Zacks Consensus Estimate is pegged at $2.44, indicating a roughly 3.4% improvement from the prior-year quarter figure. Estimates remained stable in the past 30 days. The consensus mark for quarterly revenues is pegged at $2.37 billion, implying 2.3% growth from the year-ago reported number.

PVH Corp. Price and EPS Surprise

PVH Corp. Price and EPS Surprise

PVH Corp. price-eps-surprise | PVH Corp. Quote


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

Factors at Play

PVH Corp has been benefiting from its diversified brand portfolio, particularly the Tommy Hilfiger brand. Moreover, the company’s approach toward brand management helps each of its brands to develop further through efficient marketing strategies, financial control and operating leverage.

At its international business, PVH Corp has been experiencing solid momentum mainly backed by strong growth in Europe and Asia. Improved trends in the company’s North American business, especially the wholesale unit, are also contributing to its quarterly results. The company is enriching its digital experiences as well.

On fourth-quarter fiscal 2018 conference call, management issued an encouraging view for the quarter to be reported. The company expects total revenues to increase nearly 2% year over year and 6% at cc. Brand-wise, revenues are expected to increase 1% (up 5% at cc) at Calvin Klein, 4% (up 10% at cc) at Tommy Hilfiger and 1% at Heritage Brands. Further, adjusted earnings per share are expected to be in the $2.40-$2.45 band.

However, PVH Corp’s results are hurt by adverse impacts of currency, which is likely to continue in the first quarter. Also, unfavorable foreign currency rate is expected to mar earnings per share by 14 cents.

Meanwhile, PVH Corp has been witnessing softness in its Calvin Klein business for the past few quarters. This, in turn, has been weighing on the company’s consolidated sales, which dipped nearly 1% in the last reported quarter.  Furthermore, the segment’s North America unit continues to be impacted by issues related to the Calvin Klein’s Jeans business owing to fashion miss.

What Does the Zacks Model Say?

Our proven model conclusively shows that PVH Corp is likely to beat earnings estimates in the fiscal first 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 and an Earnings ESP of +0.82%, which make us confident of earnings beat.

Other Stocks Poised to Beat Earnings Estimates

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

G-III Apparel Group, Ltd. GIII has an Earnings ESP of +5.35% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

lululemon athletica inc. LULU has an Earnings ESP of +1.57% and a Zacks Rank #1.

Abercrombie & Fitch Co. ANF has an Earnings ESP of +1.78% and a Zacks Rank #3.

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