Can PVH Corp. (PVH) Maintain Solid Trend With Q1 Earnings?

PVH Corp. (NYSE:PVH) is slated to release first-quarter fiscal 2016 results on May 25, after the closing bell. Last quarter, the company had delivered a positive earnings surprise of 4.8%. In fact, the company has outperformed the Zacks Consensus Estimate for seven straight quarters now, with an average of 6.9% over the trailing four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

PVH has mainly been gaining from the strong performance of its Calvin Klein and Tommy Hilfiger brands, which helped deliver strong results even amid tough macroeconomic conditions. Apart from this, PVH’s solid business strategies and ongoing investments in top-quality brands, along with its focus on global expansion bode well. However, the company has been bearing the brunt of adverse currency fluctuations, which are expected to persist in fiscal 2016. Also, the retail environment is anticipated to remain challenging and volatile, thus making us cautious of the upcoming results.

For the first quarter of fiscal 2016, the company expects total revenue to rise 1% year over year, while currency neutral revenue is anticipated to increase 3%. Adjusted earnings per share for the first quarter are expected to be in the range of $1.40–$1.45, including a 50 cents negative impact from currency translations. On a currency neutral basis, adjusted earnings growth is anticipated in a band of 27%–30%.

Earnings Whispers

Our proven model does not conclusively show that PVH is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for PVH is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.43.

Zacks Rank: PVH’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Earnings Estimates

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

Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) , expected to release earnings on Jun 13, 2016, currently sports a Zacks Rank #1 (Strong Buy) and an Earnings ESP of +3.39%.

NIKE, Inc. (NYSE:NKE) , which is expected to release earnings on Jun 23, 2016, currently carries a Zacks Rank #3 and an Earnings ESP of +2.08%.

Carnival (LON:CCL) Corporation (NYSE:CCL) , expected to release earnings on Jun 28, 2016, currently carries a Zacks Rank #3 and an Earnings ESP of +5.26%.

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