Is PVH Corp. (PVH) Likely to Miss Earnings This Quarter?

PVH Corp. (PVH) is slated to report its third-quarter fiscal 2014 results after the market closes on Dec 3, 2014. In the last quarter, it posted a positive surprise of 5.6%. Let’s see how things are shaping up for this announcement.

Factors Influencing the Upcoming Quarter

PVH Corp. managed to post better-than-expected second-quarter results amid a difficult macroeconomic environment. Although the company expects the impact of this situation to continue through the rest of fiscal 2014, it remains cautiously optimistic about the period and therefore has reaffirmed its outlook.

For third-quarter fiscal 2014, the company expects total revenue of $2.25 billion, representing a 3% rise from the prior-year quarter. Revenue projections are based on 1% growth at the Calvin Klein business, 4% rise at Tommy Hilfiger and a 3% increase at the Heritage Brands segment. However, including the impact of the sale of its Bass Business, Heritage Brands revenue is expected to decline 9%. Adjusted earnings per share for the third quarter are expected to be in the range of $2.45–$2.50 compared with $2.30 per share earned in the prior-year quarter.

Further, the company continues to expect adjusted earnings per share in the range of $7.30–$7.40, a 4%–5% year-over-year improvement, for fiscal 2014. Revenue for fiscal 2014 is expected to come at $8.4 billion, up 4% from the year-ago period, excluding revenues of the Bass business.

Given the aforementioned assumptions, we remain slightly apprehensive about the company’s results for 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 0.00%. This is because the Most Accurate estimate stands at $2.49 a share, which is in line with the Zacks Consensus Estimate.

Zacks Rank: PVH Corp. carries a Zacks Rank #3 (Hold), which when combined with a 0.00%ESP makes surprise prediction difficult. We caution against stocks with 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:

Zumiez Inc. (ZUMZ) with an Earnings ESP of +3.85% holds a Zacks Rank #2 (Buy).

Costco Wholesale Corporation (COST) has an Earnings ESP of +0.93% and a Zacks Rank #3.

Kroger Co.’s (KR) Earnings ESP stands at +3.28% and it carries a Zacks Rank #3.

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