PVH Looks Strong: Stock On A Roll Despite Currency Woes

PVH Corp. (NYSE:PVH) seems to be on a roll, backed by its superior brands, splendid earnings history, strategic growth efforts and robust financials. Shares of this textile-apparel designer and marketer have surged 27.8% on a year-to-date basis.

PVH had a spectacular first quarter of fiscal 2016 despite a tough retail environment. The company’s first-quarter earnings and sales outdid management’s expectations as well as the Zacks Consensus Estimate, marking its eighth positive earnings surprise in a row.

Results mainly gained from strong performance of the company’s Calvin Klein and Tommy Hilfiger brands. This encouraged management to raise its outlook for fiscal 2016. Following the results, the company has witnessed a 4.4% jump in its stock price.

PVH’s diversified brand portfolio allows the company to stay ahead of its peers, to generate above-average industry growth and sustain its position in the current challenging environment. The company’s approach to brand management facilitates each of its brands to develop further through efficient marketing strategies, financial control and operating leverage.

Further, the company has been focused on higher-margin businesses. Consequently, PVH shut down many underperforming businesses and operations that did not generate optimum returns. Moreover, the company penned various licensing and partnership deals, in an attempt to concentrate on other developing brands and utilize its resources toward several growth opportunities.

However, what remains a concern is PVH’s significant global presence, which exposes it to foreign currency risks in the current scenario, where the U.S. dollar is gaining strength. The currency headwinds, which may hurt the company’s results, are expected to persist in fiscal 2016, as reflected by its outlook.

Alongside, the company expects volatility in the overall retail environment, intense promotions and unpredictable global consumer spending to remain hurdles. These factors have also led to a downtrend in the Zacks Consensus Estimate for fiscal 2016.

Nonetheless, management remains confident of its solid business strategies and ongoing investments in top-quality brands.

Zacks Rank

PVH currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include Delta Apparel Inc. (NYSE:DLA) and Oxford Industries Inc. (NYSE:OXM) , each with a Zacks Rank #1 (Strong Buy), and Perry Ellis International Inc. (NASDAQ:PERY) , with a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

PERRY ELLIS INT (PERY): Free Stock Analysis Report

PVH CORP (PVH): Free Stock Analysis Report

OXFORD INDS INC (OXM): Free Stock Analysis Report

DELTA APPAREL (DLA): Free Stock Analysis Report

Original post

Zacks Investment Research