Can PVH Corp (PVH) Keep Earnings Beat Streak Alive In Q4?

PVH Corporation (NYSE:PVH) is slated to release fourth-quarter fiscal 2018 results on Mar 27.

The company boasts an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate for the 18th consecutive quarter. It also delivered a sales beat in eight of the trailing nine quarters.

Currently, the Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.75, mirroring an improvement of roughly 10.8% from the prior-year quarter. Estimates remained stable over the past 30 days. Moreover, quarterly revenues are projected to be $2.41 billion, reflecting a 3.6% decline year over year.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

PVH Corp has been benefiting from its diversified brand portfolio, particularly the Tommy Hilfiger brand. Also, impressive growth at Heritage Brands is aiding the company’s results. Moreover, the company’s approach toward brand management helps each of its brands to develop further through efficient marketing strategies, financial control and operating leverage.

In third-quarter fiscal 2018, PVH Corp witnessed softness across its Calvin Klein business, which negatively impacted its overall sales. Weakness across its 205 W39 NYC halo business along with issues related to Calvin Klein’s Jeans business due to fashion miss affected the brand’s results. Nevertheless, management recently announced plans to relaunch the CALVIN KLEIN 205W39NYC collection with a modern name and creative fashionable approach to connect directly to the CALVIN KLEIN brands’ family. Calvin Klein’s strategy unfolds three key initiatives that include the redesigning of the CALVIN KLEIN 205W39NYC business, adopting the digital-first model and streamlining its North America business.

Impressively, PVH Corp has been witnessing solid momentum across all its business units amid tough macroeconomic and volatile scenario. The company is enriching its digital experiences as well. As a result, it raised adjusted profit forecast for fourth-quarter and fiscal 2018. Management envisions adjusted earnings per share of minimum $1.75 for fourth-quarter fiscal 2018, which is 15 cents higher than the upper-end of its prior projection of $1.58-$1.60. This guidance comprises 5 cents per share gain from lower income tax expenses. For fiscal 2018, adjusted earnings per share are estimated to be at or above $9.50 compared with $9.33-$9.35 anticipated earlier.

Additionally, PVH Corp expects revenues for fourth-quarter and fiscal 2018 to be not less than $2.40 billion and $9.57 billion, respectively.

However, PVH Corp operates in a highly fragmented market and faces intense competition, which along with volatility in the global environment remain major concerns. This, in turn, might weigh on the company’s growth and profitability. Also, management is striving hard to turnaround the Calvin Klein brand but this might take time and hurt results in the to-be-reported quarter.

What Does the Zacks Model Say?

Our proven model conclusively shows that PVH Corp is likely to beat earnings estimates in the fiscal fourth quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PVH Corp has a Zacks Rank #3 and an Earnings ESP of +1.14%, making us confident of an earnings beat.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

NIKE, Inc. (NYSE:NKE) has an Earnings ESP of +3.93% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Monarch Casino & Resort, Inc. (NASDAQ:MCRI) has an Earnings ESP of +5.26% and a Zacks Rank #3.

Aaron's, Inc. (NYSE:AAN) has an Earnings ESP of +0.18% and a Zacks Rank #3.

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