When PVH Corp. (NYSE:PVH) announced its most recent earnings (04 August 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how PVH performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see PVH has performed.
Commentary On PVH's Past Performance
PVH's trailing twelve-month earnings (from 04 August 2019) of US$677m has declined by -2.1% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 9.9%, indicating the rate at which PVH is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, PVH has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 5.7% is below the US Luxury industry of 6.9%, indicating PVH's are utilized less efficiently. However, its return on capital (ROC), which also accounts for PVH’s debt level, has increased over the past 3 years from 8.3% to 8.7%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 86% to 51% over the past 5 years.
What does this mean?
PVH's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I suggest you continue to research PVH to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PVH’s future growth? Take a look at our free research report of analyst consensus for PVH’s outlook.
- Financial Health: Are PVH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 04 August 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.