PVH Corp. PVH is set to report third-quarter fiscal 2015 results on Dec 2. Last quarter, it posted a positive earnings surprise of 7%. Let us see how things are shaping up for this announcement.
Factors Influencing this Quarter
Looking at the earnings surprise history, PVH Corp.’s performance appears quite impressive. The company has outperformed the Zacks Consensus Estimate by an average of 5.3% over the past four quarters, with a positive earnings surprise in every quarter. In the last quarter, results were backed by strong performance of the company’s Calvin Klein and Tommy Hilfiger brands.
While PVH Corp. expects volatility in the consumer environment and currency headwinds to prevail throughout the fiscal year, it remains confident of sailing through these, given its constant endeavors to efficiently manage inventories and enhance sales by driving local traffic. Consequently, the company raised its guidance for fiscal 2015, highlighting its strong prospects.
With regard to the third quarter of fiscal 2015, the company expects a 3% decline in total revenue, while currency neutral revenue is anticipated to increase 3% year over year. Adjusted earnings per share for the third quarter are expected to be in the range of $2.45–$2.50, including a 40 cents negative impact from currency translations. However, on a currency neutral basis, adjusted earnings are expected to rise 11–13% year over year.
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 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 Corp. is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $2.49.
Zacks Rank: PVH Corp. carries a Zacks Rank #2 (Buy), which 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 to Consider
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:
Casey's General Stores Inc. CASY has an Earnings ESP of +2.08% and a Zacks Rank #1 (Strong Buy).
CarMax Inc. KMX has an Earnings ESP of +1.45% and a Zacks Rank #2.
Restoration Hardware Holdings Inc. RH has an Earnings ESP of +1.59% and a Zacks Rank #3 (Hold).
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