Ranks among better-performing branded apparel stocks
PVH (PVH) reported strong 4Q17 results on March 28, outperforming earnings expectations for a 15th straight quarter. The company also issued upbeat guidance, which was well received by the market. Its stock rose 7% on March 29 and closed at $151.43, 5.1% above the previous day’s closing price. PVH is now sitting at a YTD (year-to-date) gain of 10.3%. In comparison, VF (VFC) and Ralph Lauren (RL) have risen 0.2% and 7.8%, respectively, while Hanesbrands (HBI) has fallen 12%. PVH has also outperformed the S&P 500 Apparel and Accessories Index and the S&P 500 (SPX), which have returned 4.6% and -1.2% YTD.
PVH is currently trading at a one-year forward price-to-earnings ratio of 16.4x, and its three-year average ratio is 14.5x. Though the fashion retailer is a bit expensive historically, it is still cheaper than several other apparel players. Ralph Lauren and VF have PE ratios of 18x and 21.7x, respectively, and Hanesbrands and Michael Kors are cheaper, at 10.5x and 13.5x.
Comparing earnings potential with peers
Considering near-term earnings potential, PVH is better placed than most of the abovementioned apparel companies. The company’s earnings per share are expected to rise ~14% over the next 12 months, while Hanesbrands’ are expected to fall 9.4%, and Ralph Lauren’s and VF’s are expected to rise 3.8% and 10%, respectively. Investors seeking exposure to PVH could consider the iShares Morningstar Mid-Cap Value ETF (JKI), which invests 0.63% of its portfolio in PVH.