Understanding PVH Corp’s (NYSE:PVH) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how PVH is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. Check out our latest analysis for PVH
Was PVH’s recent earnings decline indicative of a tough track record?
I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to examine different companies on a more comparable basis, using new information. PVH’s most recent earnings is $417M, which, against last year’s figure, has plunged by a significant -38.52%. Since these values are relatively short-term thinking, I have created an annualized five-year figure for PVH’s earnings, which stands at $371M. This means while earnings declined against the prior year, in the long run, PVH’s earnings have been rising on average.
What’s the driver of this growth? Let’s take a look at whether it is merely because of industry tailwinds, or if PVH has seen some company-specific growth. In the last couple of years, PVH grew its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Scanning growth from a sector-level, the US textiles, apparel and luxury goods industry has been enduring some headwinds in the past twelve months, leading to an average earnings drop of -6.06%. This is a major change, given that the industry has constantly been delivering a a strong growth of 10.25% in the past five years. This suggests that any near-term headwind the industry is facing, it’s hitting PVH harder than its peers.
What does this mean?
Though PVH’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research PVH to get a more holistic view of the stock by looking at:
1. 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.
2. Financial Health: Is 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.
3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass 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.