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Is PVH Corp. (PVH) Likely to Beat Q1 Earnings Expectations?


We expect the owner of Calvin Klein and Tommy Hilfiger brands, PVH Corp. PVH to beat expectations when it reports first-quarter fiscal 2017 results on May 24.

Last quarter, PVH Corp. posted a positive earnings surprise of 0.8%. In fact, the company has outperformed the Zacks Consensus Estimate by an average of 7.1% in the trailing four quarters, with a beat in each quarter. Moreover, the company has a solid surprise history with earnings beat in 11 straight quarters. Let’s see how things are shaping up for this announcement.

PVH Corp. Price and EPS Surprise

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

Why a Likely Positive Surprise?

Our proven model shows that PVH Corp. may beat earnings because it has the right combination of the two key components.

Zacks ESP: PVH Corp. currently has an Earnings ESP of +0.63%. This is because the Most Accurate estimate is $1.61, while the Zacks Consensus Estimate is pegged lower at $1.60. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PVH Corp. currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

The combination of PVH Corp’s Zacks Rank #2 and a positive ESP make us reasonably confident of a positive earnings beat.

What's Driving the Better-than-Expected Earnings?

PVH Corp. has mainly been gaining from the strong performance of its Calvin Klein and Tommy Hilfiger brands, which helped deliver strong results amid tough macroeconomic conditions. Further, the company’s solid business strategies and ongoing investments in top-quality brands, along with focus on global expansion bode well.

PVH Corp. has outperformed the broader industry year to date. The company’s shares jumped 9.7%, outperforming the Zacks categorized Textile–Apparel industry’s decline of 6.6%.

Not only this, the company's diversified portfolio allows it to stay ahead of its peers, generate above-average industry growth and sustain its position in the current challenging environment. PVH Corp.’s approach to brand management facilitates each of its brands to develop further through efficient marketing strategies, financial control and operating leverage. Moreover, focus on higher-margin businesses through buyouts and divestments augur well.

For first-quarter fiscal 2017, the company expects total revenue to jump 2% year over year, while it is anticipated to advance 4%, on a constant-currency basis. Adjusted earnings per share for the first quarter are expected to be $1.58–$1.60, including 10 cents per share negative impact from currency translations.

Owing to these traits, the Zacks Consensus Estimate for both fiscal 2017 and fiscal 2018 has witnessed an uptrend in the last 30 days. While the current Zacks Consensus Estimate of $1.60 per share for the first quarter has been stable ahead of the earnings release, it reflects a year-over-year increase of 6.5%. Moreover, analysts polled by Zacks expect revenues of $1.96 billion, up nearly 2% from the year-ago quarter. These factors usher in confidence about the company’s ongoing prospects thus making us optimistic about its upcoming results.

Other Stocks that Warrant a Look

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

Wal-Mart Stores, Inc. WMT, scheduled to release earnings on May 18, currently has an Earnings ESP of +1.04% and a Zacks Rank #3 (Hold).

Lowe's Companies, Inc. LOW, slated to release earnings on May 24, currently has an Earnings ESP of +1.87% and a Zacks Rank #3.

Best Buy Co., Inc. BBY, slated to release earnings on May 25, currently has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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