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How Investors Reacted to PVH’s Q1 Results

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Investors reward PVH for strong growth numbers

Investors were pleased with PVH’s (PVH) first-quarter results, reported after the market closed on May 30. Its stock price surged ~3% on May 31. Guess (GES) and Michael Kors (KORS), which also reported their quarterly earnings on May 30, saw their stock fall 11% and 19%, respectively. Interestingly, both companies beat top- and bottom-line expectations.

PVH’s year-to-date return

PVH is among better-performing apparel companies this year, having risen 15.5%. In comparison, VF (VFC) has risen 10%, while Hanesbrands (HBI), Michael Kors, and L Brands (LB) have fallen 13%, 5%, and 43%, respectively. Ralph Lauren (RL) stock has, however, surged 33% YTD (year-to-date). PVH has also outperformed the S&P 500 Apparel and Accessories, which has risen 9.3%, and the S&P 500 (SPX), which has risen 2.3%.

Valuation

PVH is currently trading at a one-year forward PE ratio of 16.8x, and a three-year average PE ratio of 14.7x. Though the fashion retailer is trading at a slight premium to its historical average, it is cheaper than Ralph Lauren (22x) and VF (23x).

PVH also has a strong earnings outlook. Its EPS are expected to rise ~9% over the next 12 months, while Ralph Lauren’s are expected to grow ~5%, and VF’s are expected to rise 12.6%.

Whereas Hanesbrands (10.2x) and Michael Kors (12.5x) are cheaper than PVH, they have a weaker earnings outlook. While Michael Kors’s EPS are expected to rise 5.4%, HBI’s are expected to fall 6.2%. Investors seeking exposure to PVH could consider the iShares Morningstar Mid-Cap Value ETF (JKI), which invests 0.7% of its portfolio in PVH.

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