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How Does PVH Corp Compare to Its Apparel Peers on Valuation?

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A look at PVH’s current valuations

PVH  Corp (PVH) is trading at a one-year forward PE (price-to-earnings) ratio of 13.9x. At this valuation, the company is cheaper than VF (VFC), Ralph Lauren (RL), and Coach (COH), which are trading at one-year forward PE ratios of 18.6x, 16.6x, and 18.0x, respectively. The company’s valuation is comparable to that of Hanesbrands (HBI), which is trading at 13.0x. However, PVH is trading at a premium to Michael Kors (KORS), which has a one-year forward PE ratio of 10.3x.

 

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PVH’s earnings outlook

PVH Corp has a bleak earnings outlook for fiscal 2017. Its EPS (earnings per share) are predicted to fall by 7% year-over-year. However, for fiscal 2018 and fiscal 2019, the company is expected to register double-digit growth in earnings. EPS are projected to grow by 12% in fiscal 2018 and by another 11% in fiscal 2019.

Wall Street’s view of PVH

Wall Street analysts are positive about PVH Corp and see potential for the stock to return to its pre-Brexit level. PVH has a target price of $106.87 as compared to the current level of $93.55 (as of June 24, 2016). This indicates an upside of around 14%.

Of the 17 analysts who have rated PVH, 11 have recommended a “buy,” five have recommended a “hold,” and one analyst has recommended a “sell.” The company’s stock has been rated a neutral 2.3 on a scale of 1 (strong buy) to 5 (strong sell).

About PVH

Headquartered in Manhattan, PVH (PVH) is the second-largest US-based branded apparel company (by sales), trailing only VF (VFC). The company owns several internationally recognized brands such as Calvin Klein and Tommy Hilfiger, as well as Van Heusen, IZOD, Arrow, Warner’s, Olga, and Eagle.

ETF investors seeking to add exposure to PVH can consider the iShares Morningstar Mid-Cap ETF (JKG), which invests 0.5% of its portfolio in PVH.

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