PVH Corp. (PVH) is slated to report its second-quarter fiscal 2014 results after the market closes on Sep 3, 2014. In the last quarter, it posted a negative surprise of 1.3%. Let’s see how things are shaping up for this announcement.
Factors Influencing the Upcoming Quarter
PVH Corp. is poised to witness remarkable growth in the year ahead driven by its global expansion strategies and shifting focus from lower-margin products to expanding higher-margin businesses. However, for the past couple of quarters the company’s results have been negatively impacted by intense competitive situations as well as cautious consumer spending. These adverse factors have compelled the company to go for heavy promotional activities which in turn have affected its margins.
After posting lower-than-expected first-quarter results, PVH Corp. believes that the aforementioned factors will continue to weigh on its financial performance throughout fiscal 2014. Therefore, it has lowered its earnings guidance range for the fiscal to $7.30–$7.40 per share from $7.40–$7.50. Thus we remain apprehensive of the company’s performance in the upcoming quarter.
Earnings Whispers?
Our proven model does not conclusively show that PVH Corp. is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.
Zacks ESP: PVH Corp. currently has an Earnings ESP of -0.7%. This is because the Most Accurate estimate stands at $1.42 a share, while the Zacks Consensus Estimate is pegged at $1.43 per share.
Zacks Rank: PVH Corp.’s Zacks Rank #4 (Sell) when combined with a negative ESP makes surprise prediction unlikely. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
Dorian LPG Ltd. (LPG) with an Earnings ESP of +50.00% holds a Zacks Rank #2 (Buy).
Shoe Carnival Inc. (SCVL) has an Earnings ESP of +5.88% and a Zacks Rank #2.
Zumiez Inc. (ZUMZ) Earnings ESP stands at +4.55% and it carries a Zacks Rank #2.
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