PVH Corporation PVH stock has gained 7% over the past three months compared with the Textile - Apparel industry’s 17.7% growth. Also, the broader Consumer Discretionary sector has returned 10.7% while the S&P 500 index has grown 3.5% in the same time frame.

The company is gaining from the strong execution of the PVH+ Plan, alongside strength in its brands and cost-management efforts. However, a tough macro backdrop and adverse foreign currency translations remain concerns. A soft outlook for the fourth quarter and fiscal 2024 has also hurt investors’ sentiments. 

Currently priced at $103.64, PVH stock is trading at 26.6% to its 52-week high of $141.15, reached on April 1, 2024. However, it is trading at a 15.7% premium to its 52-week low mark. Let’s delve deeper.

Strategies Aiding PVH’s Rally

The company is reaping the benefits from its PVH+ Plan execution. The plan mainly aims at accelerating growth by boosting its core strengths and connecting Calvin Klein and TOMMY HILFIGER brands with the consumers 

The PVH+ Plan is focused on five key drivers, which are win with product; win with consumer engagement; win in the digitally-led marketplace; develop a demand and data-driven operating model; and drive efficiencies and invest in growth. Management reinforces the Calvin Klein and TOMMY HILFIGER brands so that these can cater to consumers’ needs in new and engaging ways.

PVH’s constant efforts to expand its international business also bode well. The company continues to experience improved European order books sequentially. It has been strategically reducing sales in Europe to improve overall sales quality and experiencing robust growth in the Asia-Pacific region. In Asia Pacific, management expects sales to rise slightly in constant currency in fiscal 2024. For the company’s North America Calvin Klein and Tommy Hilfiger businesses combined, management expects sales to be relatively flat year over year. 

Within wholesale, the company is concentrating on the robust quality of sales and winning with its major wholesale partners. It has also been advancing its product offers and innovating its key products. Moving forward in 2025, PVH Corp. anticipates returning to modest growth and accomplishing its long-term 15% operating margin target.

PVH's Six-Month Price Performance

What do the Estimates Say About PVH?

The Zacks Consensus Estimate for PVH Corp.’s fiscal 2024 earnings per share (EPS) indicates an increase of 9.4% year over year. The consensus estimate for fiscal 2025 sales and EPS indicates year-over-year growth of 1.3% and 6%, respectively.

PVH Stock’s Attractive Valuation

PVH Corp. stock is trading at a discount valuation relative to the industry. Going by the price/earnings ratio, the stock is currently trading at 8.43 on a forward 12-month basis, lower than 14.35 for the industry. Also, the stock is trading lower than its five-year median of 9.47.

Image Source: Zacks Investment Research

Concerns for PVH Corp.

Apart from a challenging operating landscape, the company has been witnessing sluggishness in its Heritage Brands for quite some time now. The segment's revenues plunged 54% year over year in the third quarter of fiscal 2024. This included a 44% year-over-year decline in the sale of the Heritage Brands women's intimates business. In addition, elevated freight costs owing to the disruptions in its major sourcing locations, along with a higher promotional backdrop, have been hurting the gross margin.

For the fourth quarter of fiscal 2024, revenues are projected to decline in the range of 6-7% (down 4-5% in constant currency) from the year-ago quarter. This included a 1% reduction related to the Heritage Brands sale and a 3% fall from the 53rd week last year. Adjusted EPS is expected to be in the range of $3.05-$3.20, down from $3.72 in the year-ago quarter. This view includes an unfavorable currency impact of 9 cents per share. Including the 53rd week, wholesale revenues are likely to be down high-single digits on a reported basis. 

For fiscal 2024, the company still anticipates a year-over-year revenue drop in the range of 6-7%, which is consistent on a constant-currency basis. This includes a 2% reduction due to the divestiture of the Heritage Brands women’s intimates business and a 1% impact from the 53rd week in fiscal 2023.

Final Words on PVH Stock

Nevertheless, the company has been strengthening its competitive advantage, accelerating profitable growth and preparing for long-term success. PVH’s robust strategies, including the PVH+ initiative and expansion efforts, position it well for growth. The company’s appealing valuation further acts as a positive. PVH currently carries a Zacks Rank #3 (Hold) at present.

Stocks to Consider

We have highlighted three better-ranked stocks, namely, Planet Fitness PLNT, Gildan Activewear GIL and Royal Caribbean RCL.

Planet Fitness, the leading franchisor and operator of fitness centers, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Planet Fitness has a trailing four-quarter earnings surprise of 7.8%, on average. The Zacks Consensus Estimate for PLNT’s current financial-year sales indicates growth of 8.9% from the year-ago figure.

Gildan Activewear, a manufacturer of premium quality branded basic activewear, carries a Zacks Rank #2 (Buy) at present. GIL has a trailing four-quarter earnings surprise of 5.4%, on average. 

The consensus estimate for Gildan Activewear’s current financial-year EPS indicates growth of 15.6% from the year-ago figure.

Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 16.2%, on average.

The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 18.6% and 71.6%, respectively, from the year-ago levels.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report

PVH Corp. (PVH) : Free Stock Analysis Report

Gildan Activewear, Inc. (GIL) : Free Stock Analysis Report

Planet Fitness, Inc. (PLNT) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research