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PVH Corp (NYSE:PVH): Immense Growth Potential?

Looking at PVH Corp’s (NYSE:PVH) earnings update in May 2018, analyst forecasts seem in-line with historical trends, with earnings growth rate expected to be 12.1% in the upcoming year, relative to the past five-year average earnings growth of 13.2% per year. With trailing-twelve-month net income at current levels of US$646.8m, we should see this rise to US$725.0m in 2019. Below is a brief commentary around PVH’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for PVH

How will PVH perform in the near future?

The longer term expectations from the 18 analysts of PVH is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of PVH’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:PVH Future Profit August 29th 18
NYSE:PVH Future Profit August 29th 18

By 2021, PVH’s earnings should reach US$705.5m, from current levels of US$537.8m, resulting in an annual growth rate of 7.4%. This leads to an EPS of $11.22 in the final year of projections relative to the current EPS of $6.93. The main reason for growth is a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. Margins is currently sitting at 6.0%, which is expected to expand to 7.1% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For PVH, there are three important factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Valuation: What is PVH worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PVH is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of PVH? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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