PVH Hits New 52-Week High - Analyst Blog
January 28 2013 - 9:00AM
Zacks
Shares of PVH
Corp. (PVH) – world’s largest shirt and neckwear company –
reached a new 52-week high of $121.26 on Friday, Jan 25, beating
its previous 52-week high of $119.62. The closing share price of
the company on Jan 28, 2013 stood at $120.86, representing a solid
return of approximately 69.9% since Jan 3, 2012. Average volume of
shares traded over the last 3 months came in at approximately
1,058,470.
Growth Drivers
An impressive record of beating the
quarterly earnings expectations, a positive fiscal 2012 outlook and
expanding business through acquisition mainly drove the upside in
the shares of PVH Corp.
PVH reported an outstanding
bottom-line performance in the third quarter of fiscal 2012, driven
by solid improvement in margins along with a lower tax rate. The
company’s adjusted earnings per share jumped approximately 24% year
over year to $2.34, beating the Zacks Consensus Estimate of
$2.29.
However, the company’s total
revenue inched down 1% on a year-over-year basis to $1.643 in the
year-ago quarter. The year-over-year revenue growth at the
company’s Tommy Hilfiger and Calvin Klein segments were more than
offset by the decline at its Heritage Brands segment and
unfavorable foreign currency exchange rates. However, quarterly
revenue surpassed the Zacks Consensus Estimate of $1.638
billion.
Bolstered by continued growth
momentum at Tommy Hilfiger and Calvin Klein brands, the company
raised its fiscal 2012 earnings guidance range to $6.37–$6.38 per
share, up from previous guidance range of $6.32–$6.37. The current
Zacks Consensus Estimate for the fiscal is pegged at $6.39 per
share, which is above the company’s guidance range. Moreover, PVH
Corp. expects net sales to increase 2% from the fiscal 2011
level.
Further, we believe that the
acquisition of The Warnaco Group, Inc. (WRC) will
facilitate the company to have operations at every major consumer
market in the world, which will ultimately boost its top line. It
is expected that the acquisition will increase the company’s 2013
earnings by 35 cents per share.
Valuation Stretched, Yet
Lucrative
PVH Corp. currently trades at a
forward P/E of 18.92x, reflecting a 38.8% premium to the peer group
average of 13.63x. Its price-to-sales ratio of 1.48 is also at a
premium to the peer group average of 1.37. Given the company’s
compelling fundamentals, the premium valuation is justified and
well supported by its long-term estimated EPS growth rate of 14.5%
versus 12.8% for the peer group. The company has a market cap of
approximately $8.54 billion.
Other Stocks to
Consider
Apart from PVH Corp., other stocks’
share prices in the industry that are gaining momentum include
Hanesbrands Inc. (HBI) and Ralph Lauren
Corporation (RL). Hanesbrands and Ralph Lauren’s share
prices rose approximately 15.4% and 6.1%, respectively, since both
the company’s reported better-than-expected bottom-line
performance. All of these companies carry a Zacks Rank #2
(Buy).
HANESBRANDS INC (HBI): Free Stock Analysis Report
PVH CORP (PVH): Free Stock Analysis Report
RALPH LAUREN CP (RL): Free Stock Analysis Report
WARNACO GRP INC (WRC): Free Stock Analysis Report
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